Economic determinants of freight rate asymmetry in the EU – Moldova corridor: a theoretical analysis of the "Empty Mile" phenomenon

Abstract

This study investigates the structural drivers of freight rate asymmetry within the European Union – Republic of Moldova transport corridor. Central to this inquiry is the "Empty Mile" phenomenon – a logistical inefficiency where heavy goods vehicles (HGVs) return to their origin without revenue-generating cargo due to persistent trade imbalances. By introducing the Empty Mile Index (EMI) as an exogenous cost shock, we analyze how different pricing paradigms – time-dependent (contractual) versus state-dependent (spot-market) – internalize these costs. Utilizing a novel synthesis of local projections and a non-cooperative Pricing Regime Game, we demonstrate that rate volatility and asymmetry are not mere market failures but endogenous equilibrium outcomes. Our findings suggest that as trade imbalances increase, the Nash equilibrium shifts toward state-dependent pricing, forcing outbound legs to subsidize non-revenue return trips.