Impact of Regulation and Deregulation on Intermodal Transportation in Europe and United States

Intermodal transportation was a common hallmark of development in the 21st century. Its lengthy history was one of the prime reasons why it was particularly popular in Europe and the United States as a model for the efficient transportation of bulky goods over long distances. An emerging concentration on intermodal transportation is a reality that many in the industry now have to contend with owing to rapid changes that have occurred in the second half of the 21st century (Konings, 2008). 

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One area that has upset this modus operandi is the introduction of new technology implemented through a regulatory arrangement that was modal based portending changes in the ordinary scheme of operation. These systematic changes paved the way for centralization, which is commonly blamed for rigorous regulation and deregulation campaigns witnessed in Europe and the United States. An in-depth discussion of regulation and deregulation is, therefore, imperative in evaluating how different jurisdictions cope with supply chain demands.

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Trade liberalization is the main positive impact that changes in intermodal transportation introduced and bound to benefit all players in the market. The era of regulation in the European and North American transportation industry was punctuated by direct involvement of governments in controlling entry and exit prices. The prevailing assumption hinged upon the idea that it was a measure aimed at protecting society while guarding vulnerable players in the industry. Regulation had previously encumbered most businesses operating within these areas, for they were required to comply with stringent government stipulations for any of their activities to be approved (Monios & Bergqvist, 2017).

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  These activities involved the transportation of large volumes of goods across several states with varying regulatory constraints.  Deregulation in intermodal transport now means that previous concerns with the handling of products have now been resolved, easing logistics and freight transportation. It even allows for the pooling of resources in businesses where entities can hire a single container, package goods, eventually reducing the cost of importation. Moreover, governments that are part of the European Union and the federal government in the United States now conduct a single clearance protocol that has significantly lessened the operational burden that they previously had to bear.

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Deregulation introduces a complex economy with more competition which, inadvertently, reduces the capacity of companies with lucrative ventures to conduct business in new environments. Although a regulation-growth link exits, it comes at a great cost to the efforts made to improve the market and attract leading high-technology firms. Regulation had previously been criticized for the lengthy process it introduced when seeking approval for important operations. Coupled with government bureaucracy, bilateral agreements between neighboring countries meant that competition was virtually removed in these areas.  The United States started this drive with the introduction of the Motor Carrier Act and the Staggers Rail Act, which reduced haulage costs dramatically (Aritua, 2019, p. 54).

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In Europe, bilateral negotiations between member countries resulted in structural changes to operations, which were a precursor to the introduction of economic freedom within the greater region. An unforeseen circumstance was the effect this policy would have on the market. Vast markets were opened through the permeation of intermodal transport networks, increasing competition. Few market players were undoubtedly unaware of the impact deregulation would have on their activities. Lowered prices and competition seemed attractive but also bore a grim underbelly. Deregulation only benefitted wealthy elite investors but affected the proletariat working as wage laborers in the market. Monopolistic controls would increase dramatically as a result of deregulation, ultimately lowering the market’s capacity.

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