Comparative Analysis: Regulation and Deregulation in Transport

This report delves into the contrasting impacts of regulation and deregulation within the transportation sector. It begins by comparing and contrasting the effects of both approaches, highlighting the evolution from a freely competitive market to the implementation of regulatory bodies like the Interstate Commerce Commission. The report then explores the major influences behind both regulating and deregulating the industry, including consumer protection and the desire for economic stability. It also examines the effects of globalization on transportation regulations, such as increased shipping volumes and the need for efficient logistics. Furthermore, the report analyzes how customers have benefited from both regulatory and deregulatory measures, focusing on factors like fare reductions and increased choices. The report concludes by synthesizing the arguments and providing a comprehensive overview of the complex interplay between regulation, deregulation, and the evolving landscape of the transportation industry.

Running head: REGULATION AND DEREGULATION IN TRANSPORTATION
REGULATION AND DEREGULATION IN TRANSPORTATION
Name of the student:
Name of the university:
Author Note:

1REGULATION AND DEREGULATION IN TRANSPORTATION
Table of Contents
Compare and contrast how regulation versus deregulation has impacted transportation..........2
What were the major influences on both regulating and deregulated the transportation
industry.......................................................................................................................................3
What effects has globalization had on regulations.....................................................................3
How have customers benefited by regulation or deregulation?.................................................4
References..................................................................................................................................6

2REGULATION AND DEREGULATION IN TRANSPORTATION
Compare and contrast how regulation versus deregulation has impacted
transportation
The Nation of United States allowed the transportation market to develop freely in a
competitive manner in the first century. However, the first National Regulatory Commission
of the nation, the Interstate Commerce Commission that was produced due to the high
competition and abuses of market power. The Regulatory commission invented regulations
and acts that will amplify the transportation services provided to the people of the nation
(Rayle et al., 2016). The Deregulation majorly focused on cutting down the impositions such
that the transportation business experiences a smooth process.
The Elkins Anti-Rebating Act in 1903 along with the Hepburn Act in 1906 replaced the
previous rates with rates that are just and reasonable. This had a negative effect on the
transportation system. This basic law allowed the reduction of transport costs for producers of
raw materials and agricultural goods. Although, there were rapid economic development in
some areas due to low transportation costs, the new rates were responsible for a decline in the
national economic efficiency. This is because the factories that were located far away from
the sources of raw materials had to minimize the transportation costs.
On the other hand, due to railroad industry’s severe economic problem, the 1958
Transportation Act revised to a rationale rate structure to improve the ruining status of the
transportation industry. According to this act, the railroads could eliminate much of its
money-losing passenger traffic but did not push the industry to economic viability. The
deregulation acts had a positive impact on the railroads as well as the motors leading to
increase in productivity and effective reduction in the transportation rates (Rye et al., 2018).
The railroads could allow services that were profitable on their end and could invest in proper
infrastructure.

3REGULATION AND DEREGULATION IN TRANSPORTATION
What were the major influences on both regulating and deregulated the
transportation industry
Regulation in the transportation industry were caused by various factors in different sections
like railroads, trucks, airlines and so on. The government tends to take regulatory measures
for proper allocation of resources and thus bring about effective productivity. The major
influencing factor behind regulation is ‘Consumer Protection’ that focuses on maximizing the
social welfare and reducing the market failure (Thelen, 2018). The Government wanted to
curb down the adverse effects of monopoly in the best interest of the people of the country.
Another major reason for regulation is the cutthroat competition in the industry. Due to
various reasons like instability in supply prices, uneconomic rate levels, the regulations are
made to decrease the competition amongst the producers in the transportation industry.
Deregulation in transportation industry is implemented to ease out the business processes and
make the functionality better. The major reason behind the deregulation is to bring stability in
the economy of the transportation industry and lead to the profit making of the organizations.
The transport industry is allowed to reduce their fuel prices. The airline industry can also
increase their seat count to gain profit by incorporating an increase in the accommodation of
the customers (Yang, Zhang & Wang, 2018). Hence, it can be concluded that the cutthroat
competition that led to restriction in the business purposes leading to the non-profitability of
the transport industry is also a reason behind deregulation in transportation.
What effects has globalization had on regulations
The increase in the world population has led to globalization of the industries across the
world. This is because the people throughout the world are in need of products and services
from various organizations. Hence, outsourcing of services is a major factor that has led to
the globalization of the business processes (Perrine, 2018). There are many products that are

4REGULATION AND DEREGULATION IN TRANSPORTATION
shipped from one country to another and this requires efficient transportation throughout the
process. Due to the increase in the number of items shipped, more container ships are being
docked at the ports. Although, there is an enhancement in business, globalization had an
impact on the regulatory and deregulatory measurements taken by the transportation industry.
There are not much truck or rail available to carry the goods from the ports to their respective
places. Hence, this led to the congestion of the ports. In addition, there are security checking
that will make delay in the ports.
Again, due to globalisation, the airline services have become more activated because of faster
delivery of items at proper timings. However, many airline services have limited capacity and
cannot incorporate maximum number of goods (Almeida & Poole, 2017). Thus, regulations
need to be altered such that the airline services can accommodate maximum goods and
deliver them at minimal time span. Globalisation has also enhanced the regulations such that
illegal goods are not transferred from one nation to the other. Hence, security inspections are
made stricter for the mentioned purpose that led to delay in the movement of the
transportation.
How have customers benefited by regulation or deregulation?
The customers have incorporated benefits in economy due to reduction in the rates of fares.
The customers were suffering from the inconsistency in the rates in the transport fares that
created much confusion. Hence, after the implementation of regulations, the customers could
specifically enjoy the transportation rates at much lower costs (Reck & Axhausen, 2019). In
addition, the regulation has implemented various beneficiary measures for the customers.
There are people who wants delivery of their goods on time. Hence, regulation in
transportation industry will help them to achieve their goods at their preferred timings.

5REGULATION AND DEREGULATION IN TRANSPORTATION
However, deregulation incorporates various advantages too. Deregulation allows for lowering
the prices for the customers and increases their choices for availability. The customer are
considered the king of the market and thus can contribute a lot to their economy if satisfied
properly (Salanova & Romeu, 2018). Since producers have less control over the significant
competitors of the industry, the customers will enjoy their beneficiary measures over this
factor. The customers will no more have to control their expenses and can spend as much as
they want on the transportation of their items.

6REGULATION AND DEREGULATION IN TRANSPORTATION
References
Almeida, R. K., & Poole, J. P. (2017). Trade and labor reallocation with heterogeneous
enforcement of labor regulations. Journal of Development Economics, 126, 154-166.
Perrine, M. (2018). Effects of Globalization on an Organization. and Business Resilience
(JEBR), 41.
Rayle, L., Dai, D., Chan, N., Cervero, R., & Shaheen, S. (2016). Just a better taxi? A survey-
based comparison of taxis, transit, and ridesourcing services in San
Francisco. Transport Policy, 45, 168-178.
Reck, D. J., & Axhausen, K. W. (2019). Autonomous taxi operations: Market structure,
competitive dynamics and regulatory implications. In 2019 TRB Annual Meeting
Online (pp. 19-01108). Transportation Research Board.
Rye, T., Monios, J., Hrelja, R., & Isaksson, K. (2018). The relationship between formal and
informal institutions for governance of public transport. Journal of Transport
Geography, 69, 196-206.
Salanova, J. M., & Romeu, M. E. (2018). Modeling framework for comparing taxi
operational modes: case study in Barcelona. Transportation research procedia, 33,
59-66.
Thelen, K. (2018). Regulating Uber: The politics of the platform economy in Europe and the
United States. Perspectives on Politics, 16(4), 938-953.
Yang, H., Zhang, Q., & Wang, Q. (2018). Airline Deregulation, Market Competition, and
Impact of High-speed Rail on Airlines in China', Airline Economics in Asia
(Advances in Airline Economics, Volume 7).