American Trucking,NAFTA,and the Cost of Distance

Abstract

As trucking replaced railroads as the basic form of freight transportation, the cost structure of the industry, which is essentially linear in distance, became the standard measure of economic distance. This led to a structure of economic geography that was much flatter and less malleable by public policy. The rise of trucking made the nation more compact and more featureless than it had been. In essence, trucking shrank and leveled the economic landscape—which was not to the advantage of those places that had economically benefited from the geography created by the railroad cost structure. The trucking provisions of the North American Free Trade Agreement have the promise of similarly shrinking the distance between Canada, Mexico, and the United States. Their failure to be implemented can be traced to the equivocal attitude that different regions have to further leveling of the economic landscape of North America.

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References

1. A short description of the nature of trucking regulation as practiced before 1980 is found in Kenneth D. Boyer , “Deregulation of the Trucking Sector: Specialization, Concentration, Entry, and Financial Distress,” Southern Economic Journal, 59(3):481-495 (Jan. 1993).

See also Charles R. Perry , Craig M. Waring , and Peter N. Glick , Deregulation and the Decline of the Unionized Trucking Industry (Philadelphia: University of Pennsylvania, Wharton School, Industrial Research Unit, 1986).

3. Transportation in America, 13th ed. (Westport, CT: Eno Transportation Foundation, 1995).

4. A discussion of the costs of each of the transport modes is found in Kenneth D. Boyer , Principles of Transportation Economics (Reading, MA: Addison-Wesley, forthcoming).

5. Kenneth A. Small , Clifford Winston , and Carol A. Evans , Road Work: A New Highway Pricing and Investment Policy (Washington, DC: Brookings Institution, 1989).

6. The extent to which shippers respond to changes in the prices charged by a mode of transport is measured by the elasticity of demand. For a summary of recent estimates, see Tae Hoon Oum , W. G. Waters II , and Jong Say Yong , “Concepts of Price Elasticities of Transport Demand and Recent Empirical Estimates,” Journal of Transport Economics and Policy, 26(2):139-154 (May 1992).

7. Committee for Study of Public Policy for Surface Freight Transportation , Paying Our Way: Estimating Marginal Social Costs of Freight Transportation, Special Report #246, Transportation Research Board, National Research Council (Washington, DC: National Academy Press, 1996).

8. Leon Moses and Ian Savage , eds., Deregulation and Safety (New York: Oxford University Press, 1989).

9. The image of the effect of trucking as “leveling” the landscape is from A. Scheffer Lang , “The Great Economic Leveling-Out of the Intercity Freight Transportation Market,” in Economic Regulation: Essays in Honor of James R. Nelson, ed. Kenneth D. Boyer and William G. Shepherd (East Lansing: Michigan State University, Institute of Public Utilities, 1981).

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10. An introduction to trucking in Canada and Mexico is found in Garland Chow , “North American Trucking Policy,” in Transportation Economics: Selected Readings, ed. Tae Hoon Oum et al. (Seoul, Korea: Seoul Press, 1995).