April 16, 2019

When trucking transportation services are bought and sold, buyers and sellers use a complicated bidding and negotiating system known as the spot market. Within North America, there is a lack of knowledge about how this market will be affected by business success and improvements in environmental sustainability and transportation efficiency. Michael Haughton, professor and CN Fellow in Supply Chain Management at Wilfrid Laurier University’s Lazaridis School of Business and Economics, is researching how changes to the process of price negotiation, as well as the technology and data available to the buyers and sellers, might improve the success of these three outcomes.

To study this, Haughton is simulating the behaviour of buyers and sellers in the market to determine both the decisions they make, such as the agreed-upon price and the chosen vendor, and the efficiency, business and environmental outcomes of those decisions. Haughton’s proposed research method is the first of its kind to use behavioural experiments to study how spot markets function. The research also considers how limitations of cognitive capacity, data and time can prevent people from making rational decisions.

This research could be used to improve the practices of professionals involved in buying, selling and negotiating within the spot market. The software-based algorithms Haughton and his team use to study human behaviour could also be used to develop new software to further improve these practices. 

His research is of interest outside the industry and scholarly community too, since reducing fuel usage in the trucking sector could be beneficial both economically and environmentally. The savings from reducing fuel consumption could be significant, as the trucking sector makes up 40 to 50 percent of Canada’s freight transportation gross domestic product. Freight transportation in the trucking sector is also a significant source of Canada’s greenhouse gases, producing 60 million tons per year. The one per cent reduction in fuel usage proposed in the study could reduce emissions by over a half million tons.