How Does Legislation Impact Intermodal Transportation?

Operations Management

Positive and Negative Influences of Legislation and Regulation on Intermodal Transportation

Intermodal transportation is seen where goods, or people, travel across different forms or modes of transport. There are many influences on this type of transportation; the development of containers increased the demand for intermodal transportation, and technology that support longer supply chain has also increase demand. Another influence on the industry has been legislation and regulation, which has had both positive and negative impacts. This paper will look at the general concept in terms of the way regulation may impact both positively and negatively on intermodal transportation, and consider some specific examples of legislation or regulation and their potential influence.

Legislation and/or regulations have impacted directly and indirectly on intermodal transportation. Legislation has included statues to support the development and maintenance of a competitive environment, as well as controls on the movement of goods as standards for health and safety. Regulations have been implemented at different levels, many of the measures have helped to protect the industry, facilitating ongoing competition between carriers and eliminating price fixing. These may be generally seen as positive, but the perspective may vary depending upon the individual company, and whether they are an incumbent holder the strong position, or new entrant (Mintzberg et al., 2011). Invariably, strategies to protect the competitive environment are more likely to benefit newcomers, reducing the potential barriers to entry, protecting against the potential power of the incumbent supplier. However, it may also be argued that the presence of competition is usually good food industry, as it helps to stimulate innovation as firms seek new ways of competing, a move which can be good for the entire industry (Mintzberg et al., 2011). Regulations and legislation may also protect the industry, and the environment in which the companies operate.

A good example of beneficial regulation is the U.S. Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) (Nolan, Ritchie, & Rowcroft, 2002). This was a Federal legislative act which was passed in order to support intermodal transportation. The act identified high priority corridors across the U.S. which were deemed necessary for the support of the intermodal transportation industry, and made funding available in order to initiate and support improvements (Nolan et al., 2002). With any industry there is a high level of reliance on the supportive infrastructure, with funding made available to support that infrastructure, there were benefits provided for the ongoing development of intermodal transportation. More efficient mode structures, would help to decrease delays and increase efficiency, which will impact on upturns and says, and potentially the transportation carriers customers. Further regulation has been seen with the Transportation Equity Act for the 21st Century (TEA-21) and the 2005 The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Each change the legislation shifted priorities, and shifted funding, in this latter be the legislation no was increased commitment towards funding around borders, which would be beneficial to carriers undertaking the cross-border transportation. It may also be argued that legislation or regulations including international trade agreements, including the setting up of trading areas, such as NAFTA, which facilitate the free movement of goods, and also provided significant benefit of intermodal transportation, reducing many the barriers that were previously present across international boarders. These agreements increase the free movement of goods in international trade, and are beneficial to intermodal transportation as goods can be removed with in a single journey without constant checks and rechecks the different borders, which increase the efficiency associated with intermodal transportation. These demonstrate some of the benefits.

Whether there is legislation or regulation, there will also be costs incurred. The first potential cost is incurred simply because there is a regulator present, or legislation needs to be enforced. This requires funding, which is usually undertaken through taxes or fees that can have a direct or indirect impact on the company (Thompson, 2008). There will also be the direct costs for the companies (Thompson, 2008). Companies will have to implement strategies for compliance, as well as the potential bureaucratic or administrative cost of proving compliance (Thompson, 2008). With any change of regulation is likely to be an impact on operations, which can create increased cost. For example, in the European Union the European wide Working Time Directive limited the amount of hours that employees can work, including drivers hauling freight, including containers. By limiting the mount of time drivers can haul their freight before taking a break, there was an immediate increase in the costs for many haulers (House of Common Transport Committee, 2004). The drivers would have to take breaks on long journeys, potentially creating delays to the delivery of containers to the destination, especially where time was critical to meet other transport models, such as ferries. In the case of transport where delays were not acceptable due to time constraints or in areas such as passenger travel, the working time limitations were overcome by sending an additional driver, which could have the impact of doubling the labor costs associated with the driving.