|Cato Policy Analysis No. 204||February 16, 1994|
by Cassandra Chrones Moore
Cassandra Chrones Moore is an adjunct scholar of the Competitive Enterprise Institute.
The deregulatory wave of the 1970s and early 1980s freed the railroads, the airlines, air cargo carriers, and inter- state trucking and buses from the most onerous federal re- strictions. The receding tide, however, left almost un- touched the intricate web of controls on intrastate trucking. In all but eight states, restrictions on entry, combined with prescribed rates and routes, continue to circumscribe the industry.
Efforts to deregulate at both the state and the federal level have run into the same arguments that were used against the Motor Carrier Act of 1980. Opponents contend that service to small communities will decline drastically and that cutthroat competition will compromise highway safety. Study after study has proven those charges baseless, but intense lobbying by organized labor, the National Association of Regulatory Utility Commissioners, and the small number of truckers who operate exclusively intrastate has succeeded in frustrating decontrol.
Regulation inhibits innovation, curtails the expansion of markets, reduces competition, and drives up prices. The inefficiency of circuitous routing and empty backhauls imposes heavy costs. Deregulation would produce major benefits. Removing federal economic controls on trucking brought U.S. industry an estimated savings of from $38 billion to $56 billion a year in shipping, merchandising, and inventory costs.
Leaving state economic regulations on trucking in place costs American businesses and consumers $5 billion to $12 billion annually. That regulatory chokehold saps the economic vitality of the entire country and undermines its competitiveness in world markets.
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