Union membership reached 920,000 by 1948. The teamsters membership was concentrated in the highly profitable intercity carriage sector, where 80 percent of workers in that sector belonged to the teamsters by 1940. Representation of such a large group of workers contributed to the teamsters ability to negotiate lucrative contracts for its members. Rate regulation that allowed trucking carriers to pass on costs to shippers further contributed to the teamsters ability to negotiate high wages. Indeed, researchers reveal that union truck drivers received wages 30 to 50 percent above wages paid to nonunion drivers working in less lucrative sectors of the trucking industry. Union growth in rail, airlines, and ocean shipping differed from trucking. Rather than a single dominant union representing the work force, workers belonged to several unions. Labor law guidelines of the 1926 railroad Labor Act influenced union development in rail and airlines.
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This approach toward entry regulation gave established carriers the opportunity to reject servicing potentially nonlucrative routes. A different regulatory approach was taken for airline carriers as they were required to service low demand locations at the rate charged for high demand locations. Compared to rate regulation in the transportation sectors previously mentioned, ocean liners experienced less government control over rates. Ocean liners were given antitrust immunity in negotiating port-to-port rates for lines involving. State-owned operations achieved the goal of providing universal and affordable service by using government revenue to subsidize transit operations. Subsidization of commuter transit was not limited to publicly provided services assignment as commuters using their own motor vehicles drive on roads constructed and maintained with significant financial support from government revenue. Transportation Labor History In a regulated Business Environment. While incumbent transportation carriers, consumers in rural areas, and commuters were the intended beneficiaries of regulation and state ownership, transportation workers also enjoyed significant benefits from these policies. Transportation labor markets became highly unionized following regulatory reform in the early part of the twentieth century. The restriction of competitive entry into transportation services contributed to a large share of these industries work forces belonging to a union. Three years following enactment of the 1935 Motor Carrier Act, the number of trucking employees belonging to the International Brotherhood of teamsters rose to 370,000 compared to 75,000 in 1933, according to a 1986 report by Charles Perry.
The rationale for limiting competition in rail, air, and water transport was that their high fixed costs made them susceptible to destructive competition. Competition in this type of market leads to periods of carrier foreclosure as firms are unable to cover costs when facing competitive price pressures. Setting the terms for service rates gave rate-makers the opportunity to promote affordable service for a large group of potential customers. Regulation did contribute to reaching policymakers goals of avoiding ruinous price competition and providing extensive network service at affordable prices. For example, minimum freight hauling the rates were imposed on railroad carriers to help them avoid financial disaster. Entry restrictions, though, required these carriers to service nonlucrative routes to rural agricultural areas. Rate regulation for trucking and airline carriers were set as mark-ups over cost. Market pressure to keep costs low in trucking did not arise since entry restrictions significantly limited entry of potential rivals along routes. Indeed, potential entrants were often limited to offering service to newly formed routes, and even then incumbent carriers were given the initial opportunity to provide such service.
Transportation services share of total trade of commercial exports varies from a low.3 percent in Western Europe to a high.5 percent in Africa. The interest of governments in the development of transportation resumes services is universally strong given that these services are a major source of economic growth. Hence, the remainder of this entry explores the twentieth-century history of governments influence on the provision of efficient transportation services. Government Policy toward Transportation Services, for the majority of the twentieth century, many countries provided state-owned transportation services. Ownership gave governments the power to offer universal service at affordable rates. Other countries such as the United States imposed economic regulation on private transportation operations. Governments role in the provision of public transit did resemble that of other countries. Municipalities owned and operated local rail and bus services. Regulation of transportation services from the 1920s to the mid-1970s restricted carrier competition and set rates along routes.
Excluding trucking, the major modes of freight transport also provide passenger service. This service constitutes a large share of air transport business. The ability to provide relatively fast transport across long distances makes this mode of travel a superior choice over rail and water passenger service. Light rail service is more cost effective than air transport for service within localities with high population density. Along with bus transport, rail provides an alternative to the use of private automobiles for local commutation. The benefits associated with rail and bus public transit in high-density areas are the easing of traffic congestion and the reduction of pollution emissions. Commuter demand for privacy and scheduling flexibility, however, makes the private use of automobiles a viable option for local commutes. The economic significance of transportation services is further highlighted by its large share of national output. For instance, transportations share of total trade of commercial import services varies from a low.7 percent in North America to a high.6 percent in Asia, according to world Trade Organization statistics published in 2004.
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Shipping volume and geography dictate the most efficient type of transportation service. For example, trucking, rail, and inland water barges generally bound transport freight within a country or region. Cost advantages from hauling relatively small shipments of 80,000 pounds or less are associated with trucking carriers primarily because such operations face small fixed costs. Often the major source of fixed costs for many trucking carriers is the leasing of trucks. The investment in more trucks and employment of more drivers to meet high volume demand at best is associated with unit costs remaining the same. In contrast, the unit costs of providing shipping service by rail and inland barges declines as volume increases due in large part to the high fixed costs of providing transport. For instance, fixed costs such as the cost of locomotives and barges are substantial and allow for additional freight volume beyond the typical 80,000-pound limit in trucking.
Labor costs associated with operating such transport equipment increase less than proportionately with increasing volume given the large hauling capacity of trains and barges. The shortcoming of trucking, barge, and rail is their inability to provide overseas service. As an alternative, international shippers rely on the services of ocean liners and air carriers. The introduction of containerized shipping by the American entrepreneur Malcom McLean in 1956 contributed to ocean liners capacity advantage over aircraft when shipping large quantities of bulk products. In contrast, aircrafts typically transport small packages and parcels. Air transport service also japanese offers the advantage of faster delivery compared to ocean liner service.
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Transportation services move people or freight from one location to another. These services are a near necessity for successful operations of businesses and governments. Efficient transportation systems contribute to businesses fulfilling purchase orders in a timely fashion. They also increase residency options for employees because workers are not restricted to living in close proximity to their jobs. Government services also benefit from the use of efficient transportation networks by enhancing governments ability to respond to national emergencies. Different modes of transportation are available to satisfy business, government, and commuter demands.
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