Stagger Act

Stagger Act

Stagger Act

Stagger Act was established in 1980 to deregulate the railroad transportation system in the US. It is considered as a federal Law in the United States to replace the regulatory structure that was controlling the industry since the 19th century.

The Act marked a new beginning in the rail system evolution in the US by reducing or permanently eliminating national regulation from the government over the control of rail operation throughout the country.

This law was established after the creation of the Railroad Revitalization and Regulatory Reform Act in the 1976 which was established to bring reform to the railway industry across the country.

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Stagger Act was aimed at bringing reforms in the industry, which included allowance of the management in the railroad to change pricing of the railway without the control or the intervention from the government.

Independence and freedom in collective rate in the process of offering of services and Rail pricing, contract rates to establish an open market and freedom of entry and exist in the rail markets across the country.

This has enabled the traffic rates to remain below statutory levels because the traffic rates have been exempted or are under contract. Stagger act enabled shipper and railroad authority to negotiate privately over transportation cost, on equipment and levels of services.

Apparently, before the establishment of the Act, economic regulation controlled and hindered railway road from altering pricing to meet financial requirements in intermodal and intramodal competition in the transportation industry in the country.

Carriers were also limited from restructuring and reorganizing transport system, including to abandonment of light density and redundant lines with are crucial in controlling cost of operation.

This leads to decline in the performance in the industry because it was unable to overcome inflation resulting from time lag in the in price rate adjustment.

Reference
Burton, M. L. (1993). Railroad deregulation, carrier behavior, and shipper response: A disaggregated analysis. Journal of Regulatory Economics, 5(4), 417-434.

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