Regulation and Deregulation
Government regulation and deregulation plays a significant role in the transportations industry. Government’s role in fostering intermodal transport innovations is significant on intermodal transportation. The US government should be the catalyst for innovation in intermodal transportation. It is argued that industry, in a free market economy, has been limited in their ability to deliver these innovations. The role of the government participation in state and industry developments has been instrumental in overcoming past problems. The transcontinental railroad was established to link the country together after the Civil War for national defense and metropolitan developments after the Second World War. The federal government offered grants of lands and financial support to companies that developed the transcontinental railroad, even though it did not officially finance the construction. Government’s reliability during national crises has resulted to the presented productivity within the transportation system. Through government’s involvement in the sector, most of the problems in the sector have been addressed effectively resulting to economic development and industry competitiveness globally. The paper argues that government regulation and deregulation of the intermodal transportation has delivered greater innovations and solutions within the sector.
Through government’s involvement, economically sufficient and environmentally sound national intermodal transportation system has been established. Additionally, a unified interconnected transport system has been positioned to promote economic development and international commerce. The government has ensured that ports, airports, and roads are easily accessible for national ties. The government directly supported the interstate Highway system by fueling taxes and reapportioning taxes to the states.
In the 1970 -1980s, the federal government embarked on ambitious program of reshaping regulation of the commercial transportation sector (Moore, 2016). The economic regulation had been initiated with the 1887 Act to control interstate commerce aimed at the railroad. This control came as a response to concerns that freed competition was ruining railroads while the uncontrolled pricing was allowing others to charge monopoly prices and inviting collusion. The Supreme Court had to confirm the earlier rights of states to regulate the railroads. Since most of the states found it complicated to control continuously and effectively state borders, the federal government had to come in. The federal government took over from the interstate commerce to ensure uniform control of the sector. The government controlled the routes the interstate commerce had to use and the prices they charged. This approach was employed in the motor carrier and the in airline industries in 1950s.
Government regulation and deregulation has been useful in providing the public with accessible and continuous services even in hardships. This was the case in the 1970s and in 1980s when several companies collapsed financially forcing the government to form the Conrail as the freight railroad linking the Northeast and Amtrak passenger railroad. Over the years, the transportation sector has faced numerous challenges. There has been the problem of bankruptcy due to deteriorating capital stock and extreme competition from the varying markets, and motor carriers. Poor management had cropped up in the past as a challenge bringing the industry to the edge of collapse (Moore, 2016). Other sectors such as the aviation have faced considerable challenges over fuel prices and unresponsive markets demands. The government as a solution can manage these ills.
Freight transportation systems worldwide have generated useful contributions to local and regional economies. These contributions have set the preferred demonstration of the economic contribution of freight. A lot of money is spent on commuting, freight movement and in transportation. This is far more than the money spent on recreation, clothing and in household expenses (University of Minnesota, 2003). The outcome of transportation on the American economy is therefore highly significant. Furthermore, one in every ten jobs in the American economy is completely related with transportation. The American government should therefore play the regulation and regulation role to enhance the intermodal sector by establishing innovative strategies.
Moore, G. T. “Deregulation and Re-regulation of Transportation. Policy Analysis. 2016
University of Minnesota. Intermodal Transportation: The Potential and the Challenge. 2003