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Pricing Anomalies and Arbitrage in Container Transport in India

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  • Amit Upadhyay

    (Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee, Uttarakhand 247667, India)

Abstract

Intermodal transportation requires multiple entities to manage diverse resources under complex regulations and contracts. In this paper, we carry out a multidisciplinary cross-functional analysis of container rail haulage pricing and operations in India. We discover that the total haulage cost of a container train unduly depends on the position of the containers within the train, which is referred to here as position arbitrage . The main objective of this paper is to introduce and analyze this new concept of arbitrage for the first time in the literature. We derive the limits to the arbitrage, present management insights and empirical results, and explain that the arbitrage is undesirable because of its adverse effects on the efficiency of the container supply chain. With a real case, we empirically show that container train operators can save an average of 450 million INR annually by exploiting the arbitrage. On completion of dedicated freight corridors, the annual total value of the arbitrage can increase by one billion Indian rupees. This research is also beneficial for the railways to understand the implications of haulage pricing on operational efficiency and also for the port operators and shippers to understand the implications of the arbitrage for their operations.

Suggested Citation

  • Amit Upadhyay, 2021. "Pricing Anomalies and Arbitrage in Container Transport in India," Interfaces, INFORMS, vol. 51(6), pages 422-434, November.
    • Handle: RePEc:inm:orinte:v:51:y:2021:i:6:p:422-434
    DOI: 10.1287/inte.2021.1082
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    References listed on IDEAS

    as
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    4. Waters II, William G., 2007. "Evolution of Railroad Economics," Research in Transportation Economics, Elsevier, vol. 20(1), pages 11-67, January.
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