Auction-based Exchanges in Parcel Logistics: Empirical Bounds for the...

Horizontal cooperation among parcel carriers, i.e., the exchange ofparcels, can be an effective means to reduce vehicle emissions whilesaving delivery costs. We propose setting up a Vickrey-Clarke-Groves(VCG) auction that shall organize the exchange of parcels among carriers such that the overall vehicle emissions and delivery costs are reduced. However, the VCG mechanism is prone to overspending, i.e.,paying the winning bidder significantly more than necessary, which isonly limited by the second price. This property is potentially problematic for parcel auctions as the available amount of money is limitedby the collected delivery fees. In a numerical study, we quantify thepremium of the VCG mechanism in a practical setting.