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A matching model for the backhaul problem

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  • Demirel, Erhan
  • Ommeren, Jos van
  • Rietveld, Piet

Abstract

The 'backhaul problem' is characterized by an imbalance in transport flows between locations. In a perfectly competitive framework with perfect information, the price of transport from low demand locations to high demand locations, the so-called backhaul price, drops to zero when the imbalance is sufficiently large. However, this result is inconsistent with empirical observations for many competitive transport markets (e.g. taxi and inland navigation markets). In this paper, we develop a matching model to show that a deviation from perfect information may address this inconsistency. We argue that carriers' search time to locate customers plays an important role in the determination of prices. We demonstrate that carriers are compensated for a part of the transport cost and for the time they search for customers. This implies positive backhaul prices. The matching model is numerically applied to the inland navigation shipping market in the Rhine river area in Western-Europe. We find that backhaul prices are substantial.

Suggested Citation

  • Demirel, Erhan & Ommeren, Jos van & Rietveld, Piet, 2010. "A matching model for the backhaul problem," Transportation Research Part B: Methodological, Elsevier, vol. 44(4), pages 549-561, May.
    • Handle: RePEc:eee:transb:v:44:y:2010:i:4:p:549-561
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    Cited by:

    1. Goh, Shao Hung & Chan, Yuxian, 2016. "Operational shadow pricing in back haul container shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 92(C), pages 3-15.
    2. Ishikawa, Jota & Tarui, Nori, 2018. "Backfiring with backhaul problems," Journal of International Economics, Elsevier, vol. 111(C), pages 81-98.
    3. Tsubota, Kenmei, 2015. "Agglomeration and directional imbalance of freight rates : the role of density economies in the transport sector," IDE Discussion Papers 488, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. ISHIKAWA, Jota & 石川, 城太 & TARUI, Nori & 樽井, 礼, 2015. "Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-12, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    5. Behrens, Kristian & Picard, Pierre M., 2011. "Transportation, freight rates, and economic geography," Journal of International Economics, Elsevier, vol. 85(2), pages 280-291.
    6. Felix L. Friedt & Wesley W. Wilson, 2020. "Trade, transport costs and trade imbalances: An empirical examination of international markets and backhauls," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(2), pages 592-636, May.

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    More about this item

    Keywords

    Backhaul problem Imperfect information Matching models Search costs;

    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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