Hub arc selection for freight consolidation

This research is designed for manufacturing companies with sparse transportation networks to evaluate the strategic possibility of private shipment consolidation, to screen a network for opportunities to implement consolidation policies, and to optimizes the network design to maximize the amount of transportation cost savings. The proposed mathematical models and solution methodologies determine the most advantageous set of hub-to-hub routes for the consolidation and transportation of less-than-truckload (LTL) shipments. A non-linear binary integer model is developed and a specialized methodology, which solves the problem through feasibility test and sub-model optimization, is proposed. Numerical results based actual data from the domestic LTL network of a large U.S. manufacturer show that up to 20% transportation cost saving is possible for certain hub-to-hub routes.