Decision-Making Process for Developing Urban Freight Consolidation Centers: Analysis with Experimental Economics

Abstract

The concept of freight consolidation center (FCC) has emerged in recent years. Although several case studies have indicated that FCCs are beneficial to the operation of urban transportation systems, the implementation of this concept has proven difficult because the construction and operation of a FCC involves the coordination of different, and conflicting, stakeholders. Unlike other traditional approaches, this paper investigates the FCC development issue using experimental economics. First, profit functions are defined for involved stakeholders; based on those profit functions, four players—carriers, operators, government, and residents—bid on rent, financial incentives, and wages to maximize their own profits. Eight scenarios are analyzed and compared to determine potential influential factors and appropriate conditions for FCC decision making. Results show that public–private partnership lowers rent and increases wages, which leads to higher carrier, operator, and resident profits. A central location lowers rent, wages, financial incentives, and all stakeholders’ profits. A larger carrier size benefits all stakeholders. In conclusion, the appropriate conditions for FCC development are public–private partnerships in noncentral locations with large carrier sizes.