Consider the extent to which your world has changed in the past 35 years. In 1980, you still did most of your banking with a teller, not an automated teller machine, and you certainly didn't do it online. In fact, you didn't even know what "online" meant—to say nothing of terms like "Internet" and "World Wide Web." Your desk didn't have a computer. Your phone was attached to the wall by a cord. If you came across a person with a cell phone, that person was no doubt quite wealthy and had the oversized biceps required to lug around one of those brick-sized "handhelds." Forget e-mail; facsimile machines were all the rage.
In the logistics world, pen and paper ruled. The emerging game-changing technology was the bar code. And it was a wonder indeed: Just point a beam of light at a package's shipping label and, boom, you knew everything about its contents, origin, and destination.
Logistics operations, though, were about to change and in a very big way, especially with respect to freight transportation. In 1980, Congress largely deregulated the trucking business with the Motor Carrier Act. Less than 24 months later, the rail industry was deregulated via the Staggers Rail Act.
The debate over the merits of deregulation went on for years. In the early days, opponents were both numerous and vocal. They decried the adverse effects on their companies and the economy at large, while bemoaning the loss of the price protection they had enjoyed under the Interstate Commerce Commission. They weren't entirely off base: Freeing motor carriers to compete on price and service resulted in an astounding number of casualties. Consider that of the top 200 motor carriers in the U.S. in 1980 (based on revenue), just five were still in business 15 years later.
Yet as time passed, the opposition voices grew fainter. Today, most acknowledge that deregulation was a very good thing. More motor carriers succeeded than failed. The rail industry consolidated and got itself back on solid financial ground. Shippers saw rates stabilize and service improve.
Still, even all these years later, there is more that can be done. Both the trucking and rail industries remain hobbled by regulations that, while profoundly less onerous than their pre-1980 counterparts, still keep carriers from operating at peak efficiency.
Two initiatives aimed at remedying the problem have been in the news lately. First, on June 10, the House of Representatives passed a $55.3 billion appropriations bill that includes language allowing twin 33-foot trailers to operate nationwide on the Interstate Highway System. Although the measure must still be reconciled with a Senate version of the bill, the momentum favors advocates of wider use of the twins, often referred to as "pups."
On the same day the House passed its version of the appropriations bill, the Transportation Research Board (TRB) issued a report, sponsored by the Department of Transportation, finding that policies designed to protect so-called captive rail shippers—businesses that lack economic alternatives to the railroads or in some cases, a single railroad—are "not working," and that current dispute resolution procedures must be reformed so shippers have adequate redress for their complaints over rate gouging. The TRB recommends development of a new formula that compares the disputed rates with those charged in competitive rail markets for comparable shipments. This would enable the Surface Transportation Board, the federal agency that regulates railroads, to more efficiently determine if a shipper paying an unusually high rate is entitled to some form of relief, according to the report.
While neither of these initiatives will unleash the gale force-level winds of change brought on by deregulation in the 1980s, they nonetheless bear watching. They are, at minimum, a pleasant and refreshing breeze to savor in this summer of 2015.
Gartner, Inc.
