The ‘backhaul problem’ is characterized by an imbalance in transport flows between locations. This problem is usually … freight price of transport from low demand regions to high demand regions, the so-called backhaul price, drops to zero. This … for transport by customers, may play an important role in the determination of backhaul prices. We demonstrate that …

transport prices because (some) carriers have to return without cargo from the low demand region to the high demand region …. Therefore, transport prices in the high demand direction have to exceed those in the low demand direction. This implies that … transport costs, and therefore trade costs, are fundamentally endogenous with respect to trade imbalances. We study this effect …