Deregulation of Motor Carrier Industry

Essay by Anonymous UserCollege, UndergraduateA+, June 1996

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Deregulation of the Motor Carrier Industry:

A Study of LTL Management Size, Structure, and Organization

Congress passed the Motor Carrier Act(MCA) of 1980, to introduce greater competition

in the motor carrier industry through significant reductions in entry barriers and price restrictions.

While there has been lots of research into the impacts of motor carrier deregulation, little attention

has been given to the effects of deregulation on management characteristics and structure. Some

recent work, however, looked at changes in size, structure, and organization of railroad

management, in response to the resulting deregulation from the passage of the Staggers Rail Act

of 1980. That work documented some very specific changes in railroad management, in response

to the new environment. Some of the changes were: a decrease in the size of top executive

management teams and greater decentralization of responsibilities; more emphasis placed on

marketing and sales, with less on traditional operations orientation; and more reliance on younger,

more educated managers, with less industry experience.

Due to the implications of the rail research, there was reason to believe that similar

impacts may have been imposed during the deregulation of the motor carrier industry. To analyze

this effect on motor carrier management characteristics and structure, would be very extensive, so

I will focus on the less-than-truckload(LTL) segment of the industry. The LTL segment is an

appropriate area because the MCA led to a significant environmental change and upheaval within

this segment. 1) Before deregulation, the government-sanctioned rate bureaus formed by LTL

carriers, in conjunction with the Interstate Commerce Commissions(ICC) restrictive entry


policies, resulted in the absence of effective competition among LTL carriers. Furthermore,

LTL, customers, whose shipments ranged from 70 to 10,000 pounds had no feasible alternatives

to LTL service. Private carriage was not an option, because many LTL...