A look back on 30 years of deregulation

For logistics veterans, it may be hard to believe that three decades have passed since the Staggers Act and the Motor Carrier Act became law. Those were the first major steps toward freeing railroads and truckers to compete on who could provide the best service at the best price. The result was not only lower freight costs, but also innovation in transportation, inventory management, and material handling practices, producing enormous economic benefits.

There were some casualties, of course. Truckers that failed to adapt to the new environment—including some of the biggest in the business—soon went under. Those failures led to years of legal battles over the legality of motor carrier discounts, when bankruptcy trustees dunned shippers for the difference between tariff rates and negotiated rates. As railroads rationalized their networks, many rural communities lost rail service and thousands of railroad workers lost their jobs. Rail mergers reduced the number of major carriers to a handful.

But the gains have been enormous. Both the railroad and the trucking industries are far more efficient than they were under regulation. Shippers have much more freedom to select their carriers based on rates and service. Shippers and carriers have often worked side by side to manage costs and improve service.

But the real proof of success has been on the road and over the rails and across the negotiating table. In a recent story, Senior Editor Mark Solomon reported on a trend that once would have been unthinkable: greater cooperation among railroads and motor carriers to offer intermodal services (see "Truckers, rails looking to share the load"). We'll report later this spring on ways that ocean carriers and truckers are working together—also a once unimaginable notion.

Regulation has not gone away entirely. Rate disputes among captive rail shippers and railroads still go to a federal arbiter, the Surface Transportation Board. State and federal safety regulations—some legitimate, some arguably not so legitimate—constrain operations. It appears disputes over the right level of regulation will always be with us.

What seems unarguable is the success of Staggers and the Motor Carrier Act and other legislation that followed. I don't think it's too much to say that removing the fetters on freight transportation had much to do with the prosperity the U.S. economy has enjoyed (despite our recent travails) over the past 30 years.