Efficient intermodal transportation auctions for B2B e-commerce logistics with transaction costs

• This paper is among the first to incorporate transaction costs into auctions.
• We extend both VCG and primal–dual Vickrey (PDV) auctions to e-commerce logistics.
• Incorporating transaction costs brings considerable cost saving for logistics chain.
• Self-interested shipper benefits from overstating values of her transaction costs.

We propose efficient intermodal transportation auctions for the B2B e-commerce logistics problem (ELP). This paper is among the first to consider transaction costs into auctions. In the ELP, the shipper is a B2B e-commerce platform by which a number of online orders between goods sellers and buyers are generated, and 3PLs (third-party logistics providers) can fulfill these online orders. The shipper bears transaction costs while goods sellers or buyers eventually pay intermodal services. We extend both Vickrey–Clarke–Groves (VCG) auction and primal–dual Vickrey (PDV) auction to the ELP where total logistics chain cost is minimized. The VCG-like auction realizes incentive compatibility, allocative efficiency, individual rationality, and budget balance for general valuations; while the PDV-like auction need presume the condition of seller-submodularity, which implies that the effect of each 3PL is decreasing when coalition increases. Computational results show that incorporating transaction costs leads to considerable cost saving for the shipper, shipper’s group (that consists of the shipper herself, good sellers and buyers), and the logistics chain, as well as higher profitability for the group of 3PLs. As the variance of transaction costs increases, incorporating transaction costs leads to higher cost saving for the entities that matter to the shipper (i.e., herself, her group, and the logistics chain), and higher profitability for the group of 3PLs, regardless of valuation distribution type. Finally, we investigate the impact of self-interested shipper and the impact of the gap between intermodal service costs and transaction costs.