The transportation industry is evolving � and government regulation plays a large role in these changes. Over the next several posts, I will cover the history of trucking regulation and deregulation by the United States Government. As we look at its progression, those of us in the business of trucking will better understand how the government has formulated freight movement in the U.S., and what we can expect in future government regulations.

In the late 19^th century, the government established the foundation of what would become the Interstate Commerce Commission (ICC), in order to create a level playing field in interstate freight transport. Congress demonstrated this goal through the Interstate Commerce Act (ICA) of 1887, legislation that targeted railroad practices deemed to be unfair, including discrimination against small markets, pools and rebates. The plan was to outlaw such practices and establish a reasonable pricing standard, which required railroads to publish their rates and make them available to the public. To enforce its provisions, the Act also created the Interstate Commerce Commission (ICC), which existed for over 100 years, well into the 1990s. The ICC�s main function was to enforce interstate commerce regulations and investigate fraud, deception and discrimination involving the movement of freight and people across the country.

The early part of the 20^th Century saw the rise of trucking, a mode of freight transportation that would eventually trump both river and railroad freight. But, technological and roadway challenges slowed the industry at first. In 1910, there were only 10,000 trucks on the road nationwide. Trucks could only run during daylight hours until 1912, when they were equipped with electric running lights that allowed them to be driven at night. In 1914, less than 15,000 miles of roads were paved throughout the entire U.S.

As World War I ended and the Roaring Twenties began new inventions and government investments transformed trucking. The fifth wheel and king pin trailer coupling device made it possible for one semi-tractor to pick and drop multiple trailers in a single driving shift. At the same time, the United States government began significant investments in roads. From 1915 to the 1930s, the government spent over $75 million on new road construction and improving existing highways. By 1935, there were 329,000 long haul trucks registered in the U.S.A. and the trucking industry came of age.

Government regulation of business intensified during trucking�s infancy, starting with Theodore Roosevelt�s election in 1900.The Roosevelt Administration sought to strengthen and enforce the Interstate Commerce Act of 1887 with the Elkins Act of 1903. This legislation strengthened the ICA's anti-rebate initiative by making it illegal to receive rebates, as well as to give them. The Hepburn Act of 1906 further increased regulation, enabling the ICC to put a cap on rate charges, determine adequate accounting procedures, and alter unfair rates to ones it deemed "just and reasonable.� Finally, the Mann-Elkins Act of 1910 empowered the ICC to suspend proposed rate increases pending an investigation of the potential effects. All of these early regulations and acts set the foundation for the Motor Carrier Act of 1935 and future trucking regulations.

The Motor Carrier Act of 1935 gave power to the ICC to regulate motor carriers who traveled across state lines in the course of doing business. Both freight hauling trucks and passenger buses were included under the legislation, which made the ICC the government watchdog regulating railroads, trucks and buses. With its presidentially appointed members, the Commission had the power to decide what companies could become motor carriers, what they could haul, where they could haul and the fees they could charge. Certain commodities, individuals and companies were exempt from ICC oversight, includeing: individuals using their own trucks to haul their own products (a furniture maker delivering cabinets he produced) and motor vehicles operated by farmers and hauling agricultural products. The constitutionality of the entire act rests on Congress's authority to regulate interstate commerce under Article I, Section 8 of the U.S. Constitution

The 1935 Motor Carrier Act split motor carriers into two categories: 1) Common Carriers, which provided their services to the public at large, and 2) Contract Carriers, which had hauling contracts with a specific number of customers. One of the most interesting (and in many cases, frustrating) stipulations in the act was that a new carrier wanting to enter a market or an existing carrier trying to expand its market was required to make application to the ICC. This new authority was only granted to a carrier if the proposed service was "required by the present or future public convenience and necessity.� The ICC commissioners had the ability to decide exactly what this requirement meant.

Would the service being sought: 

1. Serve a useful public purpose,
2. Be responsive to a public demand or need,
3. Be performed as well by existing firms or carriers
4. Confine the applicant so that the service could operate  �without endangering or impairing the operations of existing carriers.�

Amazingly, all an existing carrier had to do was say its operations were endangered or impaired and the other carrier�s request and application would be denied.

This process obviously and severely restricted carriers� growth and expansion. The rules also repressed competition between motor carriers and railroads and between common and contract carriers.

In addition to controlling which carriers received new authorities, the Motor Carrier Act of 1935 ruled that hauling rates charged by motor carriers had to be �just and reasonable� and could not be different between similar customers. In other words, if this regulation was still in effect today, a carrier would have to charge WalMart� the same rate as local grocery, hardware and clothing stores. The Act also required carriers to file any rate changes with the ICC 30 days before they became effective, which allowed other existing carriers to protest. In 1948, Congress passed the Reed-Bulwinkle Act, which set up "rate bureaus" to represent groups of motor carriers. These bureaus could agree on uniform rates applicable to all their members. Such rates, when approved by the ICC, were not subject to antitrust laws. The last Rate Bureau, for the household goods moving industry, was just disbanded on January 1, 2009.

On top of all of this regulation, in 1940 the ICC established a requirement for a Driver's Daily Log. This requirement was later revised to add the familiar graph-grid recording format to the driver's log, which became known as the �Driver's Record of Duty Status.�

The modern trucking age was born with the passage of the 1935 Motor Carrier Act, the establishment of the Driver�s Record of Duty Status by the ICC in 1940 and the Reed-Bulwinkle Act of 1948 establishing rate bureaus. Many regulations and much oversight by the government had been put into place within many truckers� lifetimes.

In the next post, I�ll cover 1950 to 1980, and how the government and trucking industry  progressed to the beginning of trucking deregulation.

Click Here to read Part 2. 

Good loads and good roads, everyone.

Timothy Brady
� 2010
To contact Brady go to www.timothybrady.com