TC Faculty Member Marco Nie Testing Truck-Hailing Platform in China

TC Professor Marco Nie is partnering with Chinese startup Manbang (formerly known as the Full Truck Alliance) to simplify and streamline China’s trucking industry operations, as a benefit to both carriers and consumers. In China in 2015, trucks moved about 31.5 billion tons of freight (roughly three-quarters of that country’s total freight tonnage), with an estimated revenue of about $1 trillion. Nie and his collaborators have developed an online freight exchange (OFEX) application system that is using mobile computing and communication technologies to match demand (loads) with supply (truck capacity) for freight in real time. The team is conducting a field experiment in China this summer that will involve a fleet of more than ten trucks.

High fragmentation is a major challenge to the efficiency of the trucking industry worldwide. There are more than 1.25 million private trucking companies in the US, of which more than 90 percent operate six or fewer trucks total. The fragmentation in China is even greater. A 2014 survey showed 85 percent of trucks are owned and operated by small for-hire carriers, with each carrier owning an average of 1.6 trucks. Operating in such an intensely competitive market is challenging, especially for small carriers who have neither bargaining power nor access to load information across the wider network within which they work. They also have no means to match their assets (i.e., truck capacity) with the most profitable loads that are being shipped by a customer. These factors compromise small carriers’ profitability and drag down the efficiency of the entire industry.

The new platform will eventually allow shippers to advertise loads publicly or privately to thousands of freight operators in search of loads. The algorithm proposed by Nie’s team utilizes probabilities and profit expectations of truckers securing follow-on loads (i.e., a new load after a load is delivered) and recommends a bidding strategy for consecutive jobs.