Sample Paper Impacts of regulatory reforms on modes of transportation

Impacts of regulatory reforms on modes of transportation

Introduction

Transportation modes are essential components of the transport systems since they are the primary means of all mobility support. Regulatory reforms have reshaped the transport landscape because of their impacts on modes of transport. “Changes in transport have been driven by privatization initiatives, often in the context of deregulation” (Oster & Strong, 2000). Reforms which aim at regulating and bringing sanity in the transport sector have major effects on modes of transport. Regulatory reforms enacted in the recent past have facilitated changes in the transportation industry (Peoples, 2014). Service delivery in the transport sector has been improved by the regulations because most of the reforms have eliminated monopoly. The essay analyzes the impacts of regulatory reforms on modes of transportation which are motor, rail, air, and pipeline.

Air transport

Air transport has been reshaped by regulatory reforms in the aviation industry which have been put in place within the last few decades. Policy makers and stakeholders in the air transport sector have crafted policies which are aimed and bring changes in the industry. The policies created include regulatory reforms which stipulate, regulate and give procedures on how things should be done. Most of the regulatory reforms are meant to ensure the safety of passengers who use air transport. For instance, Implementation of the International Civil Aviation Organization (ICAO) has come up with international standards of air transport which are supposed to be adhered to by countries across the world.

The standards and rules that have been put in place by ICAO have ensured the safety of passengers who use air as a mode of transport. Rampant accidents which occurred in the air transport industry was the driving force behind the Implementation of the International Civil Aviation Organization. African countries have been the main target of regulatory reforms that have been crafted in the air transport industry because they are the most affected by fatalities in the industry. Fatalities as a result of accidents which were rampant in the industry have been brought down by the reforms.

The US air transport system has grown drastically as a result of regulatory liberalization that has been put in place in the recent past. The Open Aviation Area Agreement with the European Union that came into effect on 2008 has had major positive effects on the US transport system. The agreement establishes strong regulatory powers and obligations in the areas of safety and security, preserving the full ability of each country to apply national laws (Fu, Oum, & Zhang, 2010). The number of trips taken by Canadian and US residents between the two countries has risen by 41% following the agreement. “Brattle Group estimated a potential annual transatlantic passenger traffic increase of between 4.1 and 11 million, resulting in an increase in consumer surplus of up to €2.7 billion” (Button, Neiva, &Yuan, 2014). The capacity of scheduled airline services between US and Canada has experienced strong growth thus boosting the economies of the two countries. The average trans-border seat capacity per day drastically increased because of the reforms that were put in place.

Motor transport

This is another mode of transport that has been affected by regulatory reforms that have been put in place in the motor transportation. Accidents in the industry have been so rampant and thus the need for regulatory reforms to bring sanity in the industry. Policy makers in the motor transport industry have come up with policies, rules, and regulations that aim at ensuring the safety of people who use motor vehicles as a mode of transport. Regulatory reforms in motor transportation have mostly affected the public transport sector. This mode of transport is accessible to numerous people because of good road networks found in several countries around the world. Many people are affected either directly or indirectly by motor transport because they are either pedestrian or use vehicles as a means of transport.

The motor carrier act has had major impacts in the US motor industry for the past few years; for instance, it has created a competitive market environment for the motor industry in the US. Entry barriers that were common in the motor industry have been eliminated with the regulation and thus ensuring effective delivery of services. Restrictions that existed and cumbersome procedures that were required of those who needed to start a motor business have been removed. There has been an increase in small trucking firms into the market because the Act ensures provides favorable conditions for competition and ensures that no one enjoys a monopoly in motor transport thus effective delivery of services. Many of the small firms that have gained entry into the motor industry as a result of the regulatory reforms lack the marketing skills and resources that are needed to operate in extensive geographical areas.

The regulation has enabled small firms in the motor industry to compete effectively with large firms. The act has not only increased the demand for brokers but has also increased the supply by eliminating the public interest test as a requirement for entry. The Motor Carrier Act has changed the way in which interstate trucking firms formulate their rates and has ensured that no transport firm deviates from the standard Bureau rates through the independent actions of individual motor carriers. There have been improvements in service delivery whereby the average rates charged per vehicle mile have declined thus making motor transport to be cheaper unlike before.

 

Rail transport

This is the oldest mode of transport that has been used to move a large number of people and things from one place to another. Globalization and advancement in technology have had major impacts on the rail as a mode of transport. The invention of the electric trains has made rail transport to be one of the fasted and most preferred modes of transportation. The risks that come with rail transport have made it necessary for stakeholders in the in industry to come up with regulatory reforms to ensure the safety of passengers who use trains. The regulatory reforms in the industry have borne fruits because they have reduced the number of accidents and fatalities in rail transportation. A single train accident has the highest fatalities due to a large number of people one train can carry. Regulatory reforms have not only reduced the number of accidents in the industry but have also ensured convenience of passengers who use rail as a mode of transport. Improvements have been witnessed in the past few years, for instance, the number of fatalities have reduced making rail transport one of the safest.

Most regulatory reforms are connected to the opening-up of rail services to competition and thus increasing access to infrastructures which were monopolized. Before the regulation, a single owner was in control of all of the assets and provided all the services needed for passengers and customers. Regulatory reforms were put in place in that services which are crucial are provided separately by tenant operators. Tenants only pay the marginal cost of their occupancy and investment costs of added capacity unlike before where they used to pay for all the services provided. Competition in freight services unlike before has increased, with the incumbent operator loosing market shares substantially as a result of the regulatory reforms. This has led to improvements in service delivery due to the elimination of the monopoly that was enjoyed before.

The regulatory reforms which have opened provision of rail services to competitors have led to efficient service delivery. The US experience in railway deregulation suggests that a reduction of the regulatory burden for rail transport has resulted in considerable productivity gains and lower prices (Martin, Roma, &Vansteenkiste, 2005). The opening of rail transportation for competition has eliminated monopoly that was enjoyed before and thus effective delivery of services as a result of many options that exist.

Pipeline transport

This mode of transport is mainly used for the movement of gasses and liquids, for instance, crude oil, petroleum, gas, and water from one place to another. Pipeline transport has major effects on the surrounding environment due to susceptibility to leakages. Regulatory reforms that have been crafted have had major impacts in the manner in which liquids are transported from one place to another. Leakages that were rampant long time ago in pipeline transport have been minimized by the policies that have been crafted to govern pipeline transport.  Regulatory reforms in pipeline transport have transformed the industry because of safety measures that have been put in place.

Regulatory reforms in pipeline transport have helped to improve service delivery in the gas industry. Customers for both gas and transmission of that gas have been regulated through classical cost-of-service rate making. Pipelines have also become subject to the regulation of entry, which requires them to obtain permission to buy and sell gas to particular customers. Regulations have been put in place such that states in the US require pipelines wishing to buy gas from a particular well to take gas rotatably from all other wells in the same pool.  Intrastate pipelines have been regulated just like interstate pipelines by the state in which they are located.

The regulatory reforms have also helped to eliminate unscrupulous dealers who used to transport gas and other flammable substance in disregard of the rules and thus exposing the lives of many people to danger. The regulation has encouraged a competitive international market for the sale and purchase of gas thus improving the US economy. U.S. domestic gas producers are now in competition than before with each other and with foreign producers to sell their gas at the market price. Before the regulatory changes, natural gas was bought and sold at the wellhead through long-term contracts.  There has been a creation of marketing affiliates thus leaving the transportation business in a separate corporate entity as a result of the regulatory reforms.

Conclusion

Regulatory reforms in the transportation sector have not only minimized the number of accidents but also sanitized it. Most reforms in the transport industry have provided rules, regulations and procedures that are supposed to be adhered to by stakeholders in the transport industry. The reforms have affected the different modes of transport in unique and diverse ways. Service delivery in the transport industry has been improved by the regulatory reforms that have been put in place, for instance, elimination of monopoly has led to better services due to the existence of alternatives.

 

References

Button, K., Neiva, R. & Yuan, J. (2014). Economic development and the impact of the EU–US Transatlantic Open Skies Air Transport Agreement. Applied Economics Letters, 21(11), 767-770.

Fu, X., Oum, T. H. & Zhang, A. (2010). Air transport liberalization and its impacts on airline competition and air passenger traffic. Transportation Journal, 24-41.

Martin, R., Roma, M. & Vansteenkiste, I. (2005). Reforms in Selected EU Network Industries. ECB Occasional paper, (28).

Oster Jr., V. & Strong, J. (2000). Transport Restructuring and Reform in an International Context. Transportation Journal (American Society of Transportation & Logistics Inc), 39(3), 18-32.

Peoples, J. (2014). Marcus Alexis and Regulatory Reform in Surface Transportation Industries. Review of Black Political Economy, 41(3), 243-258