Who benefits from air service agreements? The case of international air cargo operations

in Transportation Research Part B: Methodological (2022), 163

Air service agreements between countries spell out diverse provisions, such as reciprocal capacity allocations. We analyze how such agreements, which regulate total capacity in markets, affect total ... [more ▼]

Air service agreements between countries spell out diverse provisions, such as reciprocal capacity allocations. We analyze how such agreements, which regulate total capacity in markets, affect total welfare and its distribution. We consider the interactions between two competing cargo airlines, their end customers, logistics service providers—who serve as intermediaries between the former two agent types—as well as the policy makers. Accounting for demand uncertainty, we model this interaction as a two-stage game. In the first stage, the policy makers coordinate equal capacity allocations to the two asset providers, whereas in the second stage, the asset providers compete over prices in the spot market. Solving the model, we characterize the pricing strategies employed by the two competing capacity-constrained asset providers in the spot market when facing price sensitive demand from end customers. We further analyze the corresponding capacity decisions. We then compare this coordinated competitive setting with a collaborative setting where the two asset providers can (virtually) merge and act as a monopoly. We find that, compared with the monopoly setting, the coordinated duopoly results in lower capacity, lower profits to the asset providers, larger benefits to both end customers and logistics service providers, and overall lower total welfare. These results suggest that policy makers shall hold an open attitude towards a higher level of cooperation among the asset providers. We carry out robustness checks to verify our insights hold with three, rather than two, asset providers, with different demand distributions, when capacity is costly and when asymmetric capacities are allowed in the spot market. [less ▲]

How additive manufacturing drives business model change: The perspective of logistics service providers

in International Journal of Production Economics (2022)

Additive manufacturing (AM) is expected to facilitate local manufacturing in shorter, less complex supply chains and, thus, impact the demand for traditional logistics services. With increasing ... [more ▼]

Additive manufacturing (AM) is expected to facilitate local manufacturing in shorter, less complex supply chains and, thus, impact the demand for traditional logistics services. With increasing dissemination, AM confronts logistics service providers (LSPs) with the question of how they should adapt their business model to the threats and opportunities that come with the emerging digital technologies. We structure the AM activities of LSPs and develop a deep understanding of their resulting business model dynamics. For this exploratory purpose, this study develops a taxonomy and performs a cluster analysis to present six clusters of how LSPs approach AM today. The six profiles include LSPs that reactively monitor AM or, in contrast, proactively leverage AM for their internal operations and the development of new services for their external customers. Among them, four profiles entail fundamental changes to the traditional business models of LSPs. We find that these LSPs oftentimes continue to rely on their traditional “analog” service strengths to offer integrated service bundles of AM and logistics solutions. They bridge their lack of specific resources by strategic alliances with AM experts. Only a few LSPs have started severing ties to their traditional businesses to develop digitally dominated, platform-based AM services that require different resources. Overall, the comprehensive picture of AM activities enables us to contribute to the knowledge of how LSPs navigate in the digital age and to the nexus of business model dynamics and emerging technologies. We propose a set of propositions and support practitioners in analyzing and designing AM activities. [less ▲]

Methods for mitigating disruptions in complex supply chain structures: a systematic literature review

in International Journal of Production Research (2020), 58(6), 1835-1856

Does cargo matter? The impact of air cargo operations on departure on-time performance for combination carriers

in Transportation Research. Part A, Policy and Practice (2019), 119

Convergence in airline operations: The case of ground times

in Journal of Air Transport Management (2019), 77

Purchase Order Financing: Credit, Commitment, and Supply Chain Consequences

in Operations Research (2018), 66(5), 1287-1303

We study a supply chain where a retailer buys from a supplier who faces financial constraints. Informational problems about the supplier’s demand prospects and production capabilities restrict her access ... [more ▼]

We study a supply chain where a retailer buys from a supplier who faces financial constraints. Informational problems about the supplier’s demand prospects and production capabilities restrict her access to capital. By committing to a minimum purchase quantity, the retailer can mitigate these informational problems and expand the supplier’s feasible production set. We assume a newsvendor model of operations and analyze the strategic interaction of the two parties as a sequential game. Key parameters in our model are the supplier’s ex ante credit limit, her informational transparency—which conditions the amount of additional capital released by the commitment—and the demand characteristics of the final market. We show that in equilibrium the supplier can benefit from a lower ex ante credit limit or lower informational transparency. The retailer always benefits from an increase in these parameters. We also indicate limits to the commitment approach: under certain conditions, the retailer may prefer to relax the supplier’s financial constraint by adjusting the wholesale price, or a combination of wholesale price and commitment. Our study provides a novel perspective on capital market frictions in supply chains. The e-companion is available at https://doi.org/10.1287/opre.2018.1727. [less ▲]

Network concentration indices for less-than-truckload transportation

in TRANSPORTATION (2017), 44(6), 1475-1497

An efficient and service-oriented transportation network is a necessary resource for successful less-than-truckload operations. The design and evaluation of transportation networks are mainly driven by ... [more ▼]

An efficient and service-oriented transportation network is a necessary resource for successful less-than-truckload operations. The design and evaluation of transportation networks are mainly driven by quantitative particularly cost-oriented measures, such as transport and transshipment costs. This type of measurement, however, simply cannot represent the manifold performance of a transportation network. In particular, incorporating network concentration into network design decisions overcomes the shortcomings of purely cost-oriented decisions because spatial network concentration is at the root of many aspects of network performance (e.g., congestion and network vulnerability). This paper suggests modifications to the network concentration index and the hubbing concentration index from the passenger airline context for less-than-truckload road transportation. The modified indices enable information to be conveyed by network concentration into less-than-truckload network design decisions and provide a suitable perspective to include service-oriented aspects into network design. [less ▲]

The impact of hubbing concentration on flight delays within airline networks: An empirical analysis of the US domestic market

in TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW (2014), 66

This paper explores the relationship between hubbing activities and flight delays in the United States from an airline-specific network perspective. Airline hubbing is measured with the Hubbing ... [more ▼]

This paper explores the relationship between hubbing activities and flight delays in the United States from an airline-specific network perspective. Airline hubbing is measured with the Hubbing Concentration Index. We estimate the impact of hubbing behavior on delays, using three measures of delay, two based on delay against schedule, and the third based on buffer-corrected excess travel times. A significant (and positive) influence of hubbing concentration can only be found for the latter delay indicator. We conclude that airlines use buffer times to mitigate passenger-perceived delays against schedule that would, without buffers, arise from more complex network operations. (C) 2014 Elsevier Ltd. All rights reserved. [less ▲]