The United States of America and Europe are seen to experience an impact due to the continuous development of intermodal transportation. To promote economic growth, their governments have come up with policies that through implementation, their goals would be achieved. Implementation of such policies is done both internationally and nationally together with regulations and deregulations. An economy’s growth tends to depend on the business environment. They then intend to improve strategies for integrating processes that involve sourcing of products, production and distribution (Li, 2002). In the United States, it is through the trucking deregulation of the Motor Carrier Act of 1980 where change was seen in the logistics and transportation industry. The law encouraged the emergence of new trucking companies. According to Thomas Moore of Stanford University, trucking deregulation has been an advantage to the country’s economy. It assisted in reducing the cost of maintaining and holding inventories. He emphasizes the importance of the 1980 act and how it has facilitated the changes (Li, 2002).
Rail degeneration implementation was done through the stagger rail act of 1980. It is seen to have led to the reduction of tracking rates. There is some form of sophistication seen in the tracking industry and operations improvements. It has given opportunities to the logistics industry through the provision of simplified systems (Teske, Best, & Mintrom, 1995). Compatible networks on the trailer on flatcar were availed leading to easier product delivery through single container source by tracking and railroads companies. Through this, they have managed to have a consolidation of suppliers and falling of prices. There has also been an increase in efficiency, price competition and services due to regulation and deregulation. There has been a significant increase in partnerships agreement between railroad and trucking. It is attributed to the implementation of railroad act and motor carrier act (Teske, Best, & Mintrom, 1995).
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However, negative impacts of the regulation and deregulation are experienced. As much as the new acts enactment changed the paradigm, there are aspects of some leftover rules that still derail the industry. The acts are seen not to cover all aspects to help boost the industry, and therefore they tend to face some challenges due to the few loopholes available. An example is given of the federal law where carriers are required to have a file that contains government certificates of necessity rates and public convenience (Dempsey, 2000). Although such regulations mainly exist in specific states and enforcement is done by control of price on carriers. Countries, where such regulations apply, are seen to undergo problems of the logistics industry for many avoid investing in the industry due to the policies (Dempsey, 2000).
Regulations were placed by the government in order possess control over the different types of business through price control. Price control was mainly used over railroad companies, airlines and trucking companies where their prices were given limits where they should not go under or exceed. Such regulations were seen to have a stable control over the freight transportation industry although with time it seemed to have a diminishing effect on returns (Dempsey, 2000). It was considered to lose the competition and had a weak profitability margin in the long term. Interstate commerce act was then put into place to assist the rail road’s industry that was becoming bankrupt, the inflated prices of airlines, ocean carriers, inefficient services and motor carriers. The exciting part is that various events took place after the enactment of the ICC yet the primary purpose was for the government to prevent them from taking place (Dempsey, 2000).
In Europe, there has been strict regulation of the freight transport market. The single European market was researched in that the transport policy would only exist in a liberalized market structure and never in a strict regulations market. In 1985, the European court of justice instigated a liberalization period which aimed at the road haulage market. Due to this the market of road transport became liberalized in most member states although the tax rates differ (Tsamboulas, 2005). The main idea was to encourage competition although it has not increased as anticipated. Transportation in the inland waterways then became liberalized with harmonization of the transport policy in the member states which have in turn helped reduce the use of subsidies while stabilizing the market for inland waters.
Lastly, liberalization has been helpful to the transport industry for it has assisted in the stabilizing of the transport industry. It has encouraged those in the logistics industry to improve their profit margin with new markets to explore both nationally and internationally (Tsamboulas, 2005). The main problem witnessed in Europe with the regulation and deregulation is mainly the enforcement of social regulation on working conditions of the transport sector. Environmental policies such as emission limits in the transport industry need to consider the updating of latest infrastructure such as technology. The modal split figures show an improvement of market position through friendly environmental modes as from 1995. Another problem witnessed is that intermodal transport is not encouraging for competition, and therefore it has a small margin of competitors.
References
Dempsey, P. S. (2000). The law of intermodal transportation: What it was, what it is, what it should be. Transp. LJ , 27 , 367.
Li, Y. (2002). The economic effects of surface transport deregulation (Doctoral dissertation, Massachusetts Institute of Technology).
Teske, P. E., Best, S., & Mintrom, M. (1995). Deregulating freight transportation: delivering the goods . American Enterprise Institute.
Tsamboulas, D. A. (2005). Intermodal transport markets and sustainability in Europe. 2005) Barriers to Sustainable Transport. Institutions, regulation and sustainability, Spon Press, London , 223-244.
