Abstract
In this era of heightened competition many firms have turned to supply chain partners to collaborate to alleviate their operational inefficiencies and cut costs. Supply chain relationships are transforming to collaborative ventures, sometimes even with their competitors. In this paper we study the issues facing an electronic intermediary or a third party logistics company for achieving collaboration for transportation demands from a group of small to medium sized shippers in an Internet marketplace. We develop a methodology for studying the shipper collaboration problems and provide formulations for partly loaded and truckload shipments. The underlying cost allocation issues facing the collaborations are examined from a cooperative game theory perspective. We point out that finding stable cost allocation mechanisms are NP-Hard and develop simple heuristic cost allocation mechanisms.