- Impact on the Transportation Industry
- References and Additional Readings
Named for Congressman Harley Staggers,
The Staggers Rail Act of 1980 was implemented to deregulate the American railroad industry, allowing railroads more freedom to set their own rates.
Railroads were one of the first industries to be regulated in the United States with The Interstate Commerce Act of 1887. The Act mostly regulated rates in order to prevent discrimination. In the 1970’s many of the railroads were close to bankruptcy, nine carriers did go bankrupt. To overcome this and bring competition back to the railroads, The Staggers Rail Act of 1980 was passed. Railroads were then allowed to set their own rates and create contracts with shippers.
Throughout the time after the act was passed there were disadvantages, including the decrease in number of railroad workers. Many of the railroads merged with competitors, specifically the sixteen years between 1978 and 1994 the number of railroads operating in the United States decreased from forty one to twelve. This allowed for them to lower the number of employees they needed throughout the industry (See Exhibit 1). A disadvantage for low cost commodity shippers is the fact that rates increased due to the decreased number of competitors. As the mergers kept happening it became more of a monopoly for the railroad companies left operating. They had more of an advantage in raising their rates and being able to keep them high with less competition.
There are also advantages of the act that do not only benefit the railroad companies. For example, railroads were investing in the interstate commerce. Not only did they improve the tracks, but they also were investing on average over $6 billion a year in roadway structures and equipment. Another advantage was the ability to create contracts, allowing the railroads to plan better and shippers to have a steady rate and customer service level. With railroads being able to plan their shipments and maximize utilization, efficiency and productivity increased (See Exhibit 2).
5. Impact on the Transportation Industry
The Staggers Rail Act allowed the railroad industry to reverse their loss of shipments to the trucking industry. Today, they are a major competitor of the trucking industry. With more and more shipments moving along the rails, it reduces congestion on the interstate highways. It is estimated about fifteen million trucks are on the roads, and about two million are tractor trailers. In addition, trains can move more product while emitting less emissions into the environment. For example, a freight train only uses one gallon of fuel to transport one ton of freight about 484 miles, much less than a truck. The Act has changed the way the United States moves freight and will most likely continue to increase the amount of product shipped by train.
7. References and Additional Readings
Team: FS12_23 (11/4/12)