Freight Capacity Portfolio Design in a Two-Sided Freight Marketplace

Monday, October 2, 2023
3108 Etcheverry Hall
3:30 Pm to 4:45 PM

Abstract: In the Amazon linehaul transportation marketplace, Amazon acquires capacity to ship truckloads in its middle mile network, and provides capacity to external shippers. Because of Amazon’s high shipment volumes and commitment to rapid delivery of goods to customers, some capacity is most efficiently acquired long before it is utilized, while some capacity is best acquired immediately preceding its use.  Amazon’s large internal demand for linehaul shipping means that Amazon is well-positioned to do this, acquiring a portion of capacity through medium and long-term contracts before specific demand for that capacity is identified, while delaying the acquisition of dynamically priced spot capacity for highly uncertain demand. At Amazon, we have developed a transportation marketplace, and a series of models and tools, that allow Amazon to use pricing levers to optimize its transportation capacity portfolio. This approach enables Amazon to effectively align capacity risk, supply risk and price, and to provide carriers and shippers with tools to effectively manage their operations. We give an overview of this marketplace and survey some of the models that we have built to balance and price our capacity portfolio.

Joint work with: Idil Arsik, Timothy Jacobs, Goutam Kumar, Roger Lederman, Priyanka Mhatre, Mohsen Moarefdoost, Jacob Tutmaher

Bio:

Phil Kaminsky is the Earl J. Isaac Professor Emeritus in the Science and Analysis of Decision Making in the Department of Industrial Engineering and Operations Research at UC Berkeley. He is also a Senior Principal Research Scientist at Amazon, where he leads the Transportation Marketplace Science team. Previously, he served as Executive Associate Dean and Associate Dean for Student Affairs in the UC Berkeley College of Engineering, and before that, faculty director of the Sutardja Center for Entrepreneurship and Technology, director of the Initiative for Research in Biopharmaceutical Operations, and department chair of Industrial Engineering and Operations Research.

Professor Kaminsky's research focuses primarily on the analysis and development of robust and efficient tools and techniques for design, operation, and risk management in logistics systems and supply chains. This encompasses operational issues including the modeling and analysis of production and control systems, as well as more tactical and strategic concerns, including the integration of production, distribution, and pricing strategies, and more broadly the analysis of issues that arise in integrated supply chain management.