Abstract
This study analyzes the potential for introducing integrated palletization in vegetable and fruit logistics in response to the 2024 logistics issue and tightening of regulations on truck drivers’ maximum working hours. As palletization is expected to improve handling efficiency during produce transportation, negotiations between producers and transport companies regarding cost sharing and benefit allocation are crucial. Using an extensiveform game and a Nash bargaining solution, this study models the negotiation structure for two scenarios: the introduction of rental pallets and facility development involving palletizer installation. The study shows that adopting rental pallets reduces freight charges when the resulting transportation cost savings outweigh rental fees. However, because miscellaneous wooden pallets are treated as quasi-public goods, this condition is rarely met. Even so, projected supply shortages and increased demand for wooden pallets, combined with anticipated gains in logistics efficiency from rental plastic pallets, may create a more favorable environment for their adoption. Further efficiency improvements would require producers' groups to make facility investments such as palletizers. However, the results indicate that under current trade relationships, such investments are unlikely to advance due to hold-ups in freight rate negotiations, which turn producer-side investments into sunk costs. Overcoming these challenges requires expanding the negotiation framework to include wholesale and government actors. Moreover, institutional support and well-designed incentives are key to promoting the adoption of integrated palletization in fresh produce supply chains.
