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Two Cheers for Discrimination: Deregulation and Efficiency in the Reform of U.S. Freight Transportation, 1976–1998
Abstract
Nondiscrimination was the bedrock of U.S. transport regulation for nearly a century. The Interstate Commerce Act of 1887, the federal government’s first major regulatory initiative, barred “unreasonable discrimination” in rates and service to keep railroads from aiding one businesses or community over another. As regulation developed, similar obligations were imposed on ship lines, truck lines, and air carriers. Most freight transportation companies were forced to operate as “common carriers,” publishing a rate applicable to each commodity and applying that rate to every shipment. Equal treatment of all customers, based strictly on posted prices and terms of service, was widely considered essential to keeping the transportation market “fair.” 1 This article will argue that the end of the ban on discrimination was the most important result of the deregulation of freight transport between 1976 and 1998. This development has been little noticed by
... Legislative changes over the last 30 years have had a major impact on the motor carrier industry. The Motor Carrier Act of 1980 deregulated interstate trucking and introduced competitiveness by stripping the Interstate Commerce Commission's authority to control entry into the trucking industry and regulate commodity routes (Levinson, 2009). In 1995, intrastate trucking operations were deregulated by the Trucking Industry Regulatory Reform Act, which prohibited states from controlling routes, services, and rates within their borders (Bureau of Transportation Statistics, 2009). ...
This dissertation developed a theoretical model of the relationship between transformational leadership, organizational innovativeness, and organizational performance, both operational and financial. To test the model, data were collected from upper management at motor carriers that provide for-hire transportation services within the continental United States. A survey was developed using existing, validated scales for each of the constructs. Contact data were collected for 500 motor carriers to include individual names, positions, and e-mail addresses. The survey was administered on-line using Qualtrics. Over 4,000 e-mails were sent directly to 1,959 desired points of contact with the link to the survey. The 158 usable responses represented an 8% individual response rate and a 32% company response rate.
Analysis of the data using structural equation modeling revealed that all hypotheses were supported. The results of this study support a direct and indirect effect of transformational leadership on the bottom line performance of an organization. Two mediators, organizational innovativeness and operational performance, were tested and the amount of variance in financial performance accounted for by the hypothesized model was 38%. Implications for researchers and practitioners are discussed along with limitations and areas for future research.
First I describe my background in American historical scholarship. Thereafter, I assess the efforts of Presidents George W. Bush and Barack H. Obama and their senior advisors to stabilize American financial institutions during the period 2008–2009. My fundamental contention is that state actors such as Bush and Obama structured financial industries and markets. Despite the ubiquitous presence of these state actors, however, American business and political leaders maintained the fiction that state and business were, and properly ought to remain, separate entities. In Part III, I return to my scholarly background and to a proposed scaffolding for historical scholarship focused on the political economy of U.S. financial institutions since 1970.
First I describe my background in American historical scholarship. Thereafter, I assess the efforts of Presidents George W. Bush and Barack H. Obama and their senior advisors to stabilize American financial institutions during the period 2008–2009. My fundamental contention is that state actors such as Bush and Obama structured financial industries and markets. Despite the ubiquitous presence of these state actors, however, American business and political leaders maintained the fiction that state and business were, and properly ought to remain, separate entities. In Part III, I return to my scholarly background and to a proposed scaffolding for historical scholarship focused on the political economy of U.S. financial institutions since 1970.
Abstract Technology effects, business process development, and productivity growth are considered in the context of a single company: Wal-Mart. The starting point is the 2001 McKinsey Global Institute report, which finds that over 1995–2000, a quarter of U.S. productivity growth is attributable to the retail industry, and almost a sixth of that is attributable to Wal-Mart. Wal-Mart is interesting as well because of its rapid growth in Canada. This is now Canada's largest private sector employer. We also consider other evidence relevant to public policy formation concerning Wal-Mart and conclude with a discussion of options for partially filling important data gaps.
On considère les effets de la technologie, le développement des processus d’affaires, et la croissance de la productivité dans le contexte d’une seule compagnie : Wal-Mart. Le point de départ est le rapport de 2001 du McKinsey Global Institute qui révélait que, pour la période 1995-2000, le quart de la croissance de la productivité aux Etats-Unis était attribuable au commerce de détail, et un sixième à Wal-Mart. Le cas Wal-Mart est aussi intéressant à cause de sa croissance rapide au Canada. C’est maintenant le plus grand employeur privé au Canada. On considère certains résultats pertinents pour la formation de la politique publique en ce qui concerne Wal-Mart, et on conclut par une discussion des options ouvertes pour résoudre des problèmes de trous importants dans les données.
While the precise causes of postwar trade growth are not well understood, declines in transport costs top the lists of usual suspects. However, there is remarkably little systematic evidence documenting the decline. This paper brings to bear an eclectic mix of data in order to provide a detailed accounting of the time-series pattern of shipping costs. The ad-valorem impact of ocean shipping costs is not much lower today than in the 1950s, with technological advances largely trumped by adverse cost shocks. In contrast, air shipping costs have dropped an order of magnitude, and airborne trade has grown rapidly as a result. As a result, international trade has also experienced a significant rise in speed.
Previous calculations of the costs of railroad rate regulation assumed that deregulation would lower railroad rate levels and allow railroads to capture significant amounts of traffic from other modes of transportation. This article presents empirical results that show that neither of these effects materialized under deregulation. A calculation based on actual price and market share changes places the annual cost of regulation at roughly $90 million, well below previous estimates.
We use county and individual-level data from 1850 and 1860 to examine the economic impact of gaining access to a railroad. Previous studies have found that rail access was positively correlated with the value of agricultural land at a point in time, and have interpreted this correlation as evidence that rail access chiefly benefitted agricultural land owners in the manner predicted by the Hekscher-Ohlin or Von Theunen models. We use a difference-in-difference strategy, comparing changes in outcomes in counties that gained rail access in the 1850s to those that either gained access earlier or did not have access before the Civil War. Most of the estimated effects are small and the signs are not wholly consistent with either model, under the null hypothesis that agriculture was the chief beneficiary of rail access. For example, we find that rail access appears to have increased urbanization, raised the likelihood of participation in the service sector, decreased agricultural yields, and reduced the share of improved acreage in total land area, opposite to the patterns predicted by either the Heckscher-Ohlin or Von Theunen models.
The transportation function is critical to efficient and effective logistical operations. In order to improve transportation performance, it may be necessary for firms to form closer relationships with their carriers. Unfortunately, there are few studies examining the nuances and outcomes of shipper-carrier relationships. The focus of this work is to delineate the levels of relational closeness found between shippers and carriers and to assess the effects of relational closeness on carrier performance. Based on data and expertise provided by The Hershey Company, a major U.S. confectionary corporation, this research utilizes qualitative and quantitative techniques to accomplish these tasks. Findings indicate that closer relationships between shippers and carriers have no effect on carriers' on-time performance but significantly influence carriers' willingness to commit assets to the shipper and accept loads during times of constrained transportation capacity.
The transportation function is critical to efficient and effective logistical operations. In order to improve transportation performance, it may be necessary for firms to form closer relationships with their carriers. Unfortunately, there are few studies examining the nuances and outcomes of shipper-carrier relationships. The focus of this work is to delineate the levels of relational closeness found between shippers and carriers and to assess the effects of relational closeness on carrier performance. Based on data and expertise provided by The Hershey Company, a major U.S. confectionary corporation, this research utilizes qualitative and quantitative techniques to accomplish these tasks. Findings indicate that closer relationships between shippers and carriers have no effect on carriers' on-time performance but significantly influence carriers' willingness to commit assets to the shipper and accept loads during times of constrained transportation capacity.
This study evaluates the impact of railroad contract disclosure regulation (PL99-509) on rail rates for corn on four important shipment corridors. After the passage of this regulation, rail rates increased on corridors with no direct barge competition while rates decreased on corridors with substantial direct competition from barge traffic. The paper concludes that such rate change patterns may be a result of increased information combined with the highly concentrated structure of the rail industry. -Authors
Only recently have business historians turned their attention to the motor transportation industry. Interest in this “new” and obviously important field is well served by an historical analysis of major industry-wide trends. Too often the historian and the businessman alike work without benefit of such perspective. The evolution of the motor transportation industry is here divided into four major chronological divisions, with some summary observations about post-World War II conditions. Major emphasis is laid upon the different developmental patterns exhibited by various motor carrier classifications, upon the competitive interreaction of rail and motor transport interests, and upon the far-reaching effect of state and federal regulation. The history of the motor transportation revolution yields information of value about railroad developments and provides a background for understanding basic twentieth-century trends in commodity distribution.
The United States has assumed a position of world leadership in its efforts to reduce or eliminate tariff barriers, trade inhibitions, and investment restrictions, enabling goods, technology, services, and capital to move freely between States in the international arena. As a part of this effort, the United States has sought to reduce, to the extent practicable, domestic impediments in the field of transportation so as to optimize the unobstructed transit of commodities between inland origins and overseas destinations and between overseas origins and inland destinations. The U.S. also has concluded formal and informal bilateral and multilateral agreements designed to minimize the barriers which obstruct the free flow of commerce between nations, and to minimize domestic restraints on transnational commercial activity. As a result of these efforts, we are witnessing a spectacular increase in the importation and exportation of goods.These overwhelming increases in foreign trade have been brought about, in part, by a diminution in transport inhibitions. In a circular fashion, the present reexamination of the existing legal framework in the field of transportation is, to a certain extent, attributable to these massive increases in foreign commercial activity and the concomitant demands for an efficient and economical transportation network which have inevitably arisen therefrom. It is this contemporary evaluation of traditional legal and technological concepts in the field of international transportation to which this essay is addressed.In our era of rapidly diminishing impediments to the free flow of capital, goods, technology, and services between nations, transnational commercial activity has become extremely important to our national economy. New frontiers are being broken as raw materials and manufactured products move more freely between nations which have heretofore shared little in culture, history, religion, race, or economic and political philosophy. Certainly, governmental initiatives designed to eliminate trade inhibitions are responsible for much of this growth. Tariff walls are crumbling. The world economy is prospering. The interdependencies that flourish between members of the world community as a result of bilateral and multilateral trade agreements enhance the possibility of achieving long-term political stability, economic growth, and global peace. It has become the position of the United States that increased international economic cooperation will inevitably lead to increased political toleration and peaceful coexistence.Innovations in the field of transportation have made possible increased commercial activity promoting greater interdependency between nations. Intermodal transport innovation in the United States has been of essentially two kinds: (1) technological innovation, enabling commodities and individuals to move with greater speed, efficiency, and economy; and (2) regulatory innovation by Federal agencies responsible for regulating the rates and routes of international carriers.Statutory and regulatory innovation has also contributed to the enormous contemporary growth of transnational commercial activity. This latter type of innovation shall be explored in this essay. After the introduction, the article is divided into three primary sections. In the first, we examine the origins of intermodal law and regulation. In the second, we review the contemporary legal landscape on intermodal transportation. In the third, we recommend several potential improvements in the legal regime.
This article provides information gathered in a survey of the CEOs of the 25 largest third-party logistics companies operating in the US. Their industry is relatively new, with more than half of their companies having initiated operations since 1984. Most of their companies are subsidiaries of large transportation or warehousing enterprises. These service providers are becoming increasingly international, with nearly all of them having expanded their operations outside the US. As the industry continues to evolve, the large providers are increasingly turning to alliances with other companies as a means of broadening their services offerings. Transportation services, warehousing, and value-added services are the industry's most significant revenue generators. The net investment, employment base, and customer base of these companies vary considerably. All of the survey respondents reported annual revenues in excess of 1 billion. Many of the companies have attempted to niche themselves in particular industries, and, to date, they have primary focused their sales efforts on large corporations. The industry continues to grow rapidly, with more than two-thirds of the CEOs projecting one and three year company growth rates in excess of 20 percent. According to the CEOs, the most important industrial dynamics affecting the industry are increased interest in outsourcing logistics activities, greater interest in one-stop shopping, and increased CEO/CFO participation in considering the third-party option.
Data on aggregate concentration in the United States economy for the years 1978 to 1987 are analyzed. Economy-wide aggregate concentration decreased during this time period. Aggregate concentration increased in the retail trade, electric and gas utilities, and transportation sectors but decreased in the manufacturing and life insurance sectors. Issues surrounding the appropriate measurement of aggregate concentration are discussed.
Increased understanding of the ecological importance of temporal environmental variation has led to a concern that many regulated rivers lack the natural variations in flow required to maintain pre-regulation communities. Many of the existing environmental flow methods fail to adequately address this concern. This paper presents a new approach to characterizing flow variations for environmental flow studies using knowledge of the influence of flow events on biological and geomorphic processes. This approach has the advantage that ecological benefits of the environmental flow are clearly articulated, available knowledge is included in the development of flow recommendations and the method accounts for the natural dynamism in flow-related ecosystem processes by using the natural flow regime as a template for the environmental flow regime. The Flow Events Method is demonstrated in an application to the Snowy River in southeast Australia. Copyright © 2003 John Wiley & Sons, Ltd.
The Ocean Shipping Reform Act of 1998 (OSRA) promotes changes in international ocean liner shipping. An important policy issue attendant to the passage of OSRA is the Act's likely impact on the international competitiveness of the sectors that depend upon ocean shipping. Thus, to establish how freight rates and other logistical costs of using ocean liner services are now determined, this study examines emerging methods of organization and contracting among exporters of food and forest products. We find that, although many shippers negotiate private contracts with carriers, many others utilize a third-party agent to negotiate a rate with a carrier on their behalf. This article also identifies differences between two key types of third-party agents. Finally, given that a shipper in this trade does not contract directly with a carrier, this article explains the shipper's conditional choice about which type of agent to use. [EconLit citations: L140, L980, Q130]. © 2003 Wiley Periodicals, Inc. Agribusiness 19: 459-472, 2003.
This paper examines the characteristics of incentive contracts in which the agent's payoff is not based on the principal's objective. The author shows that contracts based on such performance measures will not, in general, provide first-best incentives, even when the agent is risk neutral. The form of the optimal contract and the efficiency of this contract depend on the relationship between the performance measure used and the principal's objective. The model provides a simple and intuitive statistical measure. Applications to various incentive contracting situations, including the "gaming" of performance measures, the use of revenue-based sales commissions, and relative performance evaluation, are presented. Copyright 1992 by University of Chicago Press.
Two reform acts, the Staggers Railroad Act of 1980 and the Railroad Revitalization and Regulatory Reform Act of 1976, represented big changes in U.S. policy toward railroads. An important welfare gain from these changes predicted by researchers was the efficiency gain from increased densities in rail freight traffic. However, few retrospective studies have analyzed the accuracy of these predictions. The present paper fills this gap by analyzing the effects of regulatory changes on freight traffic density, through simulation of the cost savings from gains in density, using a newly estimated rail cost function, and by comparison of these results with earlier predictions. Our results indicate net benefits of 10 billion per year (as of 2001), stemming from cost savings from increased traffic densities relative to what would have occurred under regulation. These benefits are substantially higher than those predicted by researchers in the 1970s and early 1980s, for reasons explained in the paper.
Since partial deregulation of the railroad industry in 1980, real rail rates have fallen. Yet, previous studies are inconclusive in identifying deregulation as the reason for lower rates. In this paper, the author develops a model that tests a variety of deregulation effects on the rates charged for transporting thirty-four different commodities. The results suggest that deregulation has significantly affected almost all commodities and that the effects vary by commodity and through time. Initially, deregulation increased rates for some commodities, had no effect on others, and decreased rates on still others. However, by 1988, deregulation lowered rates significantly for almost all commodities. Copyright 1994 by Blackwell Publishing Ltd.
While the precise causes of postwar trade growth are not well understood, declines in transport costs top the lists of usual suspects. However, there is remarkably little systematic evidence documenting the decline. This paper brings to bear an eclectic mix of data in order to provide a detailed accounting of the time-series pattern of shipping costs. The ad-valorem impact of ocean shipping costs is not much lower today than in the 1950s, with technological advances largely trumped by adverse cost shocks. In contrast, air shipping costs have dropped an order of magnitude, and airborne trade has grown rapidly as a result. As a result, international trade has also experienced a significant rise in speed.
This paper develops a framework to analyze the long-run adjustment of U.S. industries to economic deregulation, highlighting the role of intensified competition, innovations in operations, marketing, and technology, and adjustments to external shocks. The author applies this framework to industries that have recently undergone substantial deregulation--airlines, motor carriers, railroads, banks, and natural gas--and concludes that these industries have become far more efficient because of deregulation and provided large benefits to consumers. He concludes that the same adjustment process and positive outcome for consumers will result from the forthcoming deregulation of communications and electricity. Copyright 1998 by American Economic Association.
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Future of Contract Rates in Rail Transportation
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Regulation of Discrimination in Railway Freight Transport
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Logistics Costs Drop to Record Low Levels
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Contract Rates: Increasing Rail Profitability
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Inedible Tallow, The Maximum Charges Rule, and Other Fables: Motor Carrier Regulation By The ICC.
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The Case Against Common Carriage
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Economic Census: Retail Trade, Subject Series: Establishment and Firm Size, various years
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