Motor Carrier Act of 1980
Encyclopedia
The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 (MCA) is a United States federal law which deregulated
the trucking industry
.
, entry controls
, and collective vendor price setting in United States transportation, begun in 1970-71 with initiatives in the Richard Nixon
Administration, carried out through the Gerald Ford
and Jimmy Carter
Administrations, and continued into the 1980s, collectively seen as a part of deregulation in the United States.
Since the passage of the Interstate Commerce Act of 1887
, the federal government had regulated various transportation modes, starting with the railroad industry, and later the trucking and airline industries. Increasing public interest in deregulation led to a series of federal laws beginning in 1976 with the Railroad Revitalization and Regulatory Reform Act
. The deregulation of the trucking industry began with the Motor Carrier Act of 1980, which was signed into law by President Carter on July 1, 1980.
Studies of the legislative process leading up to passage of the MCA indicate that the Act resulted from a concert of action by the Carter Administration, Congressional leaders, including Senator Ted Kennedy
, an extensive coalition of "civil society" organizations which was a follow-on to coalitions created for rail and air transport regulatory reforms, and Interstate Commerce Commission
ers appointed by Presidents Nixon and Carter who supported the pro-competition objectives of the legislative initiatives of 1971 to 1980 (notably A. Daniel O'Neal and Darius Gaskins).
The MCA was envisioned to be a sweeping de-regulation of the trucking industry. When President Carter signed the bill, he proclaimed:
A particularly interesting aspect of this legislation is that it was implemented more aggressively (in a pro-competitive direction) than it was written. Promoting independent pricing and open entry were critical to achieving a level of competition made possible by the characteristics of the trucking industry. Under Darius Gaskins, the Chair of the Interstate Commerce Commission
in the period immediately following passage of this Act, entry controls were dramatically reduced. In addition, the Commission interpreted the Act to allow contract rate making without regulatory review, and opened the field for transport brokers who could manage better match ups between the demand for transport services and the availability of carriers.
Before this law was passed, the industry had simply passed along higher wages and operating costs to shippers. The law had far-reaching consequences, causing price competition and lower profit margins.
A result of the law was that the number of new firms has increased dramatically, especially low-cost, non-union carriers. By 1990 the number of licensed carriers exceeded forty thousand, more than double the number in 1980. Combined with the Staggers Act (1980), intermodal freight transport
surged, expanding 70 percent between 1981 and 1986.
Deregulation—freeing up the trucking market to permit much more flexible pricing and service arrangements, disciplined by competition—allowed manufacturers to reduce inventories, move their products more quickly, and be more responsive to customers. Consumers indirectly benefited from the more efficient, lower-cost transport of goods. (See From Economic Deregulation to Safety Regulation Department of Transportation comprehensive study on deregulation effects.)
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
the trucking industry
Trucking industry in the United States
The trucking industry involves the transport and distribution of commercial and industrial goods using commercial motor vehicles . In this case, CMVs are most often trucks; usually semi trucks, box trucks, or dump trucks...
.
Background
Motor carrier deregulation was a part of a sweeping reduction in price controlsPrice controls
Price controls are governmental impositions on the prices charged for goods and services in a market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternatively, to insure an income for providers of certain goods...
, entry controls
Barriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...
, and collective vendor price setting in United States transportation, begun in 1970-71 with initiatives in the Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
Administration, carried out through the Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...
and Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
Administrations, and continued into the 1980s, collectively seen as a part of deregulation in the United States.
Since the passage of the Interstate Commerce Act of 1887
Interstate Commerce Act of 1887
The Interstate Commerce Act of 1887 is a United States federal law that was designed to regulate the railroad industry, particularly its monopolistic practices. The Act required that railroad rates be "reasonable and just," but did not empower the government to fix specific rates...
, the federal government had regulated various transportation modes, starting with the railroad industry, and later the trucking and airline industries. Increasing public interest in deregulation led to a series of federal laws beginning in 1976 with the Railroad Revitalization and Regulatory Reform Act
Railroad Revitalization and Regulatory Reform Act
The Railroad Revitalization and Regulatory Reform Act of 1976, often called the "4R Act," is a United States federal law that established the basic outlines of regulatory reform in the railroad industry and provided transitional operating funds following the 1970 bankruptcy of Penn Central...
. The deregulation of the trucking industry began with the Motor Carrier Act of 1980, which was signed into law by President Carter on July 1, 1980.
Studies of the legislative process leading up to passage of the MCA indicate that the Act resulted from a concert of action by the Carter Administration, Congressional leaders, including Senator Ted Kennedy
Ted Kennedy
Edward Moore "Ted" Kennedy was a United States Senator from Massachusetts and a member of the Democratic Party. Serving almost 47 years, he was the second most senior member of the Senate when he died and is the fourth-longest-serving senator in United States history...
, an extensive coalition of "civil society" organizations which was a follow-on to coalitions created for rail and air transport regulatory reforms, and Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
ers appointed by Presidents Nixon and Carter who supported the pro-competition objectives of the legislative initiatives of 1971 to 1980 (notably A. Daniel O'Neal and Darius Gaskins).
The MCA was envisioned to be a sweeping de-regulation of the trucking industry. When President Carter signed the bill, he proclaimed:
- This is historic legislation. It will remove 45 years of excessive and inflationary Government restrictions and redtape. It will have a powerful anti-inflationary effect, reducing consumer costs by as much as $8 billion each year. And by ending wasteful practices, it will conserve annually hundreds of millions of gallons of precious fuel. All the citizens of our Nation will benefit from this legislation. Consumers will benefit, because almost every product we purchase has been shipped by truck, and outmoded regulations have inflated the prices that each one of us must pay. The shippers who use trucking will benefit as new service and price options appear. Labor will benefit from increased job opportunities. And the trucking industry itself will benefit from greater flexibility and new opportunities for innovation.
Overview of the law
The Act prohibited rate bureaus from interfering with any carrier's rights to publish its own rates, and, as implemented, removed most rate making from the rate bureaus, eliminated most restrictions on commodities that could be carried, and deregulated the routes that motor carriers could use and the geographic regions they could serve. The law authorized truckers to price freely within a "zone of reasonableness," meaning that truckers could increase or decrease rates from current levels by 15 percent without challenge, and encouraged them to make independent rate filings with even larger price changes.A particularly interesting aspect of this legislation is that it was implemented more aggressively (in a pro-competitive direction) than it was written. Promoting independent pricing and open entry were critical to achieving a level of competition made possible by the characteristics of the trucking industry. Under Darius Gaskins, the Chair of the Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
in the period immediately following passage of this Act, entry controls were dramatically reduced. In addition, the Commission interpreted the Act to allow contract rate making without regulatory review, and opened the field for transport brokers who could manage better match ups between the demand for transport services and the availability of carriers.
Before this law was passed, the industry had simply passed along higher wages and operating costs to shippers. The law had far-reaching consequences, causing price competition and lower profit margins.
A result of the law was that the number of new firms has increased dramatically, especially low-cost, non-union carriers. By 1990 the number of licensed carriers exceeded forty thousand, more than double the number in 1980. Combined with the Staggers Act (1980), intermodal freight transport
Intermodal freight transport
Intermodal freight transport involves the transportation of freight in an intermodal container or vehicle, using multiple modes of transportation , without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damages and...
surged, expanding 70 percent between 1981 and 1986.
Deregulation—freeing up the trucking market to permit much more flexible pricing and service arrangements, disciplined by competition—allowed manufacturers to reduce inventories, move their products more quickly, and be more responsive to customers. Consumers indirectly benefited from the more efficient, lower-cost transport of goods. (See From Economic Deregulation to Safety Regulation Department of Transportation comprehensive study on deregulation effects.)
Further reading
- Belzer, Michael H.Michael H. BelzerMichael H. Belzer, Ph.D., is an internationally recognized expert on the trucking industry, especially the institutional and economic impact of deregulation. He is an associate professor, in the economics department at Wayne State University. He is the author of Sweatshops on Wheels: Winners and...
Sweatshops on Wheels: Winners and Losers in Trucking Deregulation. Publisher: Oxford University PressOxford University PressOxford University Press is the largest university press in the world. It is a department of the University of Oxford and is governed by a group of 15 academics appointed by the Vice-Chancellor known as the Delegates of the Press. They are headed by the Secretary to the Delegates, who serves as...
, USA (August 24, 2000) Hardcover: 272 pages. ISBN 0195128869; ISBN 978-0195128864.