Case Study On Positive Impacts

Impacts of Regulation and Deregulation on the Growth of Intermodal Transportation

Impacts of Regulation and Deregulation on the Growth of Intermodal Transportation

Introduction

Deregulation and regulation strategies have had relatively positive effects on the constant development of intermodal transportation in Europe and the United States. Equally, deregulation and regulation strategies employed by governments in Europe as well as the U.S government have yielded positive results in the development of intermodal transportation. Consequently, to stimulate the development of their economies, these governments have tried to develop and implement cohesive policies to control intermodal transport, both internationally and nationally, with deregulations and regulations. Additionally, deregulations in the maritime shipping, motor carrier, rail, and aviation industries have created platforms for many new competitors. Equally, they have facilitated the development of an environment that produces affordable, efficient, and innovative transportation services (United States, 1994).
With the constant growth of global economics, businesses endeavour to develop improved methodologies of incorporating product distribution, production, and sourcing. Additionally, changes in logistics and transportation in the U.S, especially changes in the trucking industry, were widely introduced because of trucking deregulation through the 1980 Motor Carrier Act. Subsequently, when the Motor Carrier Act was ratified into law, it created a conducive platform for the emergence of new tracking companies. Equally, trucking deregulations have enabled the United States and Europe to witness increased economic growth levels, as they recorded substantial reductions in the costs of maintaining and holding inventories. Furthermore, European Union regulations led to significant reductions in maritime accidents as well as marine pollution (National Research Council, 1985).

Adverse Impacts

In reality, governments seldom administer and implement regulation and deregulation measures based on set criteria. Primarily, information problems or challenges are common. In a world characterized by limited information, high transaction costs, and uncertainties, individuals who can access information use it to benefit themselves while denying others similar opportunities. Equally, regulation often weakens the property rights structure within an organization, thereby imposing a higher boundary on the achievable return rate. In Europe, freight transport markets have dramatically changed in the past two decades. Therefore, all comparatively environment-friendly means of transport lost their market shares, as the road transport was expanding (National Research Council, 1985).
Additionally, regulations made railways, in Europe and the United States, to lose relative and absolute terms. Consequently, there was a structural alteration in market demand, and their inertia to change to the requirements of demand. Similarly, there was the slow improvement of railway reorganizations because of political protection as well as the absence of harmonization, such as, the internalization of externalities and balanced regulation. Despite adopting deregulation policies in Europe, railway companies still face various problems or challenges such as the reducing demand and use of rail transport, underemployed personnel, and decreasing profitability. Equally, there is a relatively high demand to invest in vehicles, marketing, information systems, buildings, and infrastructure, but little or no attention is directed towards investments in railway transport. Despite embracing deregulation policies, the state is still financing operating and investment deficits associated with intermodal transportation in Europe and the United States (United States, 1994).

Concussion

In conclusion, the implementation of the rail deregulation policy was widely occasioned by the 1980 Staggers Rail Act, which led to the significant drop in trucking rates and developed a more urbane trucking industry with advancements in operations. Furthermore, it lowered down the administration’s red tape by establishing a logistics system that is more simplified. Subsequently, trucking companies and railroads were able to create a well-matched trailer-on-flatcar system providing easier products delivery using a lone container source. As a result, the companies have witnessed a consolidation amid suppliers and falling prices (Tompkins, 1998). Indeed, deregulation has many positive impacts, which are evident through pricing competition, additional services, and increase in effectiveness. Equally, using of intermodal transportation through agreements of combined partnership with railroad and trucking has significantly increased since the adoption of the Railroad Act and the Motor Carrier Act.

References

National Research Council (É.-U.). (1985). Transportation system management and signal systems. Washington, D.C: National Research Council.
Tompkins, J. A. (1998). The warehouse management handbook. Raleigh: Tompkins.
United States. (1994). Transportation statistics annual report. Washington: Bureau of Transportation Statistics, U.S. Dept. of Transportation.