Jean-Paul Rodrigue (2017), New York:
Routledge, 440 pages.
The Nature of Transport Policy
Authors: Dr. Brian Slack, Dr. Theo Notteboom and Dr.
The terms "policy" and "planning" are used very loosely and are frequently
interchangeable in many transport studies. Mixing them together is misleading.
Policy and planning represent separate parts of an overall process
of intervention. There are circumstances where policy may be developed
without any direct planning implications, and planning is frequently
undertaken outside any of direct policy context. However, precise
definitions are not easily come by. The following definitions are here used:
Transport policy deals with the development of a set of constructs
and propositions that are established to achieve particular objectives
relating to social, economic and environmental development, and
the functioning and performance of the transport system.
Transport planning deals with the preparation and implementation
of actions designed to address specific problems.
The goal of transport policy is to make effective decision
concerning the allocation of transport resources, including the
management and regulation of existing transportation activities. Thus, transport policy can be concomitantly a public and private
endeavor, but governments are often the most involved in the policy
process since they either own or manage many components of the transport
system and have levels of jurisdiction on all existing
transportation modes. Governments also often perceive that it is their role to manage
transport systems due to the important public service they provide in
addition to impose a
regulatory framework. Yet, many transport systems, such as maritime
and air transportation, are privately owned. There are however
substantial geographical variations in ownership with the United States
having an history of private involvement while Europe, China, India and
Japan have more relied on public ownership and operations. The common rule is that the public sector usually provides transport
infrastructure and the regulatory framework, while the private sector
assumes the provision and operations of many modes.
With globalization and
deregulation, the private sector has much leverage into the policy process through its asset allocation
decisions, which reflects in new public transport policy paradigms.
Public policy is the means by which governments attempt to
reconcile the social, political, economic and environmental goals
and aspirations of society with reality. These goals and aspirations
change as the society evolves, and thus a feature of policy is its
changing form and character. Policy has to be dynamic and evolutionary.
A major distinction between the planning and policy is that the latter
has a much stronger relation with legislation. Policies are frequently,
though not exclusively, incorporated into laws and other legal instruments
that serve as a framework for developing planning interventions. Planning
does not necessarily involve legislative action, and is more focused
on the means of achieving a particular goal, often within the
existing regulatory framework.
2. The Relevance of Transport Policy
Transport policies arise because of the importance of transport
in virtually every aspect of economic, social and political
activities of nation states. Transport is taken by governments
of all inclination, from those that are interventionalist to the most liberal,
as a vital factor in economic development. Transport is seen as a key
mechanism in promoting, developing and shaping the national economy.
Many regional development programs, such as the Appalachia Project in
the US and the 1960s and the contemporary Trans-European Networks (TENs)
policy in the EU are transport-based. Governments and international
institutions such as the World Bank also seek to promote
transportation infrastructure and services where private capital investment
or services may not be forthcoming. Paradoxically, the links between transport and economic development
are at times questionable.
Transport frequently is an issue in national security. Policies
are developed to establish sovereignty or to ensure control over national
space and borders. The Interstate Highway Act of 1956, that provided
the United States with its
network of expressways, was formulated on
the grounds of national security. Security was at the heart of the
impositions regarding passengers or freight clearance taking place
at the port of departure in addition to conventional clearance occurring
at the port of entry.
Transport raises many questions about public safety and the environment.
Issues of public safety have for a long time led to the development
of policies requiring driving licenses, limiting the hours of work of
drivers, imposing equipment standards, establishing speed limits, mandating
highway codes, seat belts and other accident controls. More recently,
environmental standards and control measures are being instituted, in
response to the growing awareness of the environmental impacts of transport.
Examples include banning leaded gasoline and mandating catalytic converters
Transport policy has been developed to prevent or control the inherent
monopolistic tendency of many transport modes. Unrestrained competition
commonly leads to market dominance by a company thereby achieving monopoly power.
Such dominance brings into question many issues affecting the public
interest such as access (smaller actors prevented to access
availability (smaller markers being less service or services being
discontinued) and price (the monopolist being in a position
to charge high prices).
Other reasons for policy intervention include the desire to limit
foreign ownership of such a vital industry for concerns that the
system would be sidetracked to service more foreign than national
interests. For example, the US limits
the amount of foreign ownership of its domestic airlines to a maximum
of 49%, with a maximum of 25% control. Other countries have similar
In recent years, four trends had significant consequences over
the context in which transport policy takes place:
Governments have a large number of
instruments at their disposal
to carry out transport policy. Some are direct, such as public
ownership, but the majority are indirect such as safety standards. The
most common are:
- Globalization increased interactions at the international
level, both for freight and passengers. This lead to the
emergence of large actors managing a portfolio of modes and
infrastructures across international jurisdictions and therefore
dealing with a variety of transport policies.
- Deregulation and privatization have been
ongoing in many transport markets. This has enabled the transfer
of ownership and operation of many transport modes to the
private sector and favored the entry of new actors.
- A broader focus of policies, particularly in light of intermodalism and multimodalism
as well as logistics.
This has enabled a better coordination of investments improving
the efficiency of interconnected transportation networks and the
related supply chains.
- A move towards social and political issues behind transport
projects as opposed to technical and engineering issues. Policy
is becoming more responsive towards public concerns over issues
such as environmental externalities and social equity. However,
this has also been linked with additional costs, delays and
controversy of many large transportation projects.
A common issue concerning policy instruments is that they may have
unintended consequences, particularly if they are indirect. For
instance, taxation and subsidies could influence one mode
4. Trends in Policy Development
Public policies reflect the interests of decision makers and their
approaches to solving transport problems. These interests and approaches
are both place specific (they apply to a particular area of jurisdiction)
and time specific (they are established to reflect the conditions of
transport and the intended solutions at a point in time). Policies change
and evolve as conditions change and as new problems are recognized; they are dynamic. The dynamic nature of policy is reflected in the way the policy instruments
have been employed over the years. In the 19th Century, when many
of the modern transport systems were being developed, the prevailing
political economy was one of laissez-faire, in which it was believed
that the private sector should be the provider of transport services
and infrastructure. Examples of private transport provision include:
- An extremely important instrument is
public ownership. The direct control by the state of transportation
infrastructure, modes or terminals is widespread. Most common is the provision by public agencies
of transport infrastructure such as roads, ports, airports and canals.
Public ownership also extends to include the operation of transport
modes. In many countries airlines, railways, ferries and urban transit
are owned and operated by public agencies.
- Subsidies represent an important instrument used to pursue
policy goals. Many transport modes and services are capital intensive,
and thus policies seeking to promote services or infrastructure that
the private sector are unwilling or unable to provide may be made commercially
viable with the aid of subsidies. Private railroad companies in the
Nineteenth Century received large land grants and cash payments from
governments anxious to promote rail services. In the US, the
that seeks to protect and sustain a US-flagged merchant fleet, subsidizes
ship construction in US shipyards. Indirect subsidies were offered to
the air carriers of many countries in the early years of commercial
aviation through the awarding of mail contracts. Dredging of ship channels
and the provision of other marine services such as pilotage and navigation
aids are subsidies to facilitate shipping. Both public ownership and subsidies represent instruments that require
the financial involvement of governments. Revenue generation is becoming
an increasingly important instrument in transport policy.
control represents a means of influencing the shape of transportation
that is very widely employed. By setting up public agencies to oversee
particular sections of the transport industry, governments can influence
the entire character and performance of the industry. The agencies may
exert control on entry and exit, controlling which firms can offer transportation
services, at what prices, to which markets. Thus while the actual services
may be offered by private firms, the regulator in fact plays a determining
role. Regulatory agencies in the US such as the Civil Aeronautics Board
played a critical role in shaping the US airline industry for decades.
- Many governments
are major promoters of research and development in transportation.
Government research laboratories are direct products of state investments
in R&D, and much university and industry R&D is sustained by government
contracts and programs. The outcomes of this research are extremely important
to the industry. It is a vital source for innovation and the development
of new technologies such as intelligent vehicles and intelligent highway
systems. In addition, educational institutions that are commonly
funded by public resources provide operators, managers and analysts for the
private transport sector.
- Labor regulations pertaining to conditions of employment,
training, and certification may not be directed purposefully at influencing
transport, but as a policy they may exert a significant effect over
the industry since it has an impact on its operating costs.
- Safety and operating standards, such as speed limits,
may have a similar effect. The restrictions on limiting the number of
hours a truck driver may work may be instituted for safety reasons and
for enhancing the working conditions of drivers, but they shape the
economics of truck transport. In the same fashion speed limits help
fix the distance of daily trips that one driver may undertake, thereby
shaping the rate structure of the trucking industry.
This situation was not completely without public policy involvement,
however. The massive subsidies that were granted to North American
railroads are an example of state intervention. In the early 20th
overprovision of rail lines, competition between carriers and market
failures led to a crisis in many parts of the transport industry, particularly
after 1918. This led to a growing degree of government involvement in
the transport industry, both to offset market failures, jurisdictional
conflicts and to ensure that services could be maintained for the sake
of the "public good":
- Turnpikes. The
first British modern roads in the 18th century were the outcome
of private trusts aiming a deriving income from tolls on roads they
built and maintained. It was likely the first massive private involvement
in transport infrastructure provision.
- Canals. Many of the
earliest canals were built with private
capital. One of the first canals that helped spark the Industrial
Revolution in Britain was the
- Urban transit. In most North American cities public transit
was operated by private firms. The earliest examples were horsecars
that followed rail lines laid out on city streets. With electrification
at the end of the 19th century, the horsecars were converted to
streetcars and the network was greatly expanded. In the 20th century
busses were introduced by private companies operating on very extensive
- Ships. Most maritime shipping companies were private enterprises.
Many were family businesses, some of which became large companies,
such as the Cunard Line in the UK, MSC in Switzerland, or
Maersk in Denmark. The main government involvement
concerns military navies and ferries.
- Railways. Railways were developed by private companies
during the 19th century. In
North America this has continued to the present
Many segments of the private transport sector were eventually
captured by the government. In addition to the public ownership of transport modes, there emerged
in the 20th century a growing amount of regulatory control.
The belief in liberal markets with little public interference was
seriously reconsidered after the crash of 1929 and the economic downturn
of the early 1930s. From that moment on governments were incited to
extend the scope of their responsibilities. The public sector was an
important trigger for the reconstruction of Europe in the aftermath of
World War II (e.g. the Marshall plan), for the modernization
of the industrial structure and for economic growth. Economic and social
measures were directed towards the creation of the welfare state. The
period from the 1940s to the 1970s were characterized by nationalization
when socialist ideology was put into practice throughout the world. For
example, the European transport industry saw the emergence of large
national companies in public transport, freight rail, ferry services, deepsea shipping and the airline industry. These large
companies could mobilize new sources and technologies, thereby
contributing to the national objectives of economic growth and full
While centrally planned economic systems (such as the Soviet Union,
Eastern Europe and China)
involved a complete control by the public sector, governments in Western
Europe and North America were also major players in the market through
market control systems up to the full nationalization of industries
considered to be of strategic importance to economic development and
external trade. The airline and the trucking industries saw entry
limited by permits, and routes and rates were fixed by regulatory
boards that had been set up to control the industries. At the same
time greater safety regulations were being imposed and working
conditions were increasingly being shaped by labor legislation.
By the 1960s, therefore, transportation had become under the sway
of public policy initiatives that exerted an enormous influence on the
industries and their spatial structures. At the same time, there was
also a growing body of evidence that
indicated that public ownerships and regulation were not always in the
public interest. Transportation costs that were fixed by the regulatory
authorities were maintained at higher levels than were necessary.
Research demonstrated that many regulatory boards had been "captured" by
those they were supposedly regulating, so that they were frequently
acting to protect the industries rather than the public. At the same
time there was a crisis of public finances in many countries, where the
costs of operating the state owned transportation industry were seen to
be unsustainable. The theory of contestability
repudiated traditional economic theory concerning monopoly power by
arguing that the threat of entry of a new
actor was sufficient to thwart a monopolist’s ability to impose monopoly
pricing. The key, therefore, was to relax entry thresholds, by allowing
new firms to start up, a process that regulatory boards were impeding.
This evidence was brought into the public policy arena by politicians
who espoused market-oriented views, notably President Reagan in the
US and Prime Minister Thatcher in the UK. Although President Carter
had initiated the first steps towards deregulation in the US in the
mid-1970s, it was in the 1980s during the Reagan presidency that trucking,
the airline industry, and the railways were largely deregulated. In
the UK, in addition, there has been a massive move to privatize most
sectors of the transport industry, including state and most municipally-owned
bus companies, the national airline, trucking, the railway, airports
and most seaports.
Deregulation and privatization policies have spread, unequally,
to many other parts of the world. New Zealand has perhaps the most open
transport policy, but many others, such as Canada and Australia have
made significant steps in this direction. In the EU, the pace of deregulation
and privatization is proceeding unevenly. Subsidies to state owned transport
companies have been terminated and many airlines have been privatized.
Government-owned railroads still exist in France, Germany, Italy
and Spain, but the tracks have been separated from the traction and
rail service operations, and have been opened up to new service providers.
In Latin America, most of the state-owned transport sector has been
deregulated. While the former centrally-planned states have had to make
the furthest adjustments to a more open market economy, several, such
as China, have opened up large sections of the transport industry to
joint ventures with foreign private enterprises. In China, many new
highways and most of the major ports are being developed with private
capital. Thus, at the beginning of the 21st Century, transportation
is under less direct government economic control worldwide than at any
period over the last 100 years.
5. Changing Nature of Policy Interventions
The trends in transport policy
in recent decades have been towards liberalization and
privatization. This has not necessarily weakened the role of governments
and their interventions over transportations.
Controls over monopoly power are still in place, and even in the most
liberal of economies there is still strong evidence of public policy
intervention even in countries such as the US, for example:
- In many cities private bus companies were taken over by municipally
controlled transit commissions in the 1930s and 1940s.
- The airline industries in many countries were placed under the
control of a national public carrier, for example Air France,
Trans Canada Airlines, and British Overseas Airways Corporation.
- Railways were nationalized in Europe after World War
Two, and in the US, after the collapse of the Penn Central Railroad
and several other lines, a publicly-funded passenger system (Amtrak)
was set up, and a publicly owned freight railroad was established
Government policy orientations have changed, however. Governments
are beginning to exert greater control over environmental and security
concerns, issues that are replacing former preoccupations with
economic matters. For instance, because of biofuel policies aiming at ethanol production
using corn, the unintended consequence was a surge on global
food prices as more agricultural land was devoted for energy
production instead of food production. Sustainability and the environment
are becoming a
significant issue for government intervention. Coastal zone
legislation has made it increasingly difficult for ports to develop
new sites. Air quality is a major factor influencing the
allocation of US federal funds for urban transport infrastructure.
In Europe, environmental issues are having an even greater influence
on transport policy. The EU Commission is promoting rail and short
sea shipping as alternatives to road freight transport. Projects are
assessed on the basis of CO2 reduction. All transportation projects
are subject to extensive environmental assessments, which may lead to
a rejection of proposals, despite strong economic justification. As a major source of atmospheric pollution and environmental
degradation, the transportation industry can anticipate many further
government environmental policy interventions.
Safety has always been a policy
issue. Legislation imposing speed limits, mandating seat
belts, and other measures have sought to make travel safer. These continue
to proliferate. However, it is the area of security that the most recent
set of policy initiatives have been drawn. Screening of people and freight
has become a major concern since 9/11. Both the US government and such
international organizations as the International Maritime organization
(IMO) and the International Civil Aviation Authority (ICAO) have instituted
new measures that impact on operations, and represent additional costs
to the transport industry.
While there may have been some reduction of policy involvement involving
economic regulations, the influence of public policy on transport overall
is still powerful but
contentious at times. It must be acknowledged that capital
investment by government in transport infrastructure commonly follows
multiple and sometimes conflicting policy goals. For
instance, short terms policy goals of job creation are usually
incompatible with long term goals such as economic growth and energy
efficiency. The usual outcome is that projects with multiple policy
goals reduce their economic benefit.
- Ownership of ports and airports.
Terminals continue to be largely under State or municipal ownership,
but concession agreements to private operators are common.
Thus, the Port of Los Angeles is a department of the City of Los
Angeles; the port of Hampton Roads is owned by the Virginia Port
Authority; New York’s three major airports are owned by the Port
Authority of New York and New Jersey.
- Highway provision, upgrade and maintenance remains one
of the most significant and enduring commitment of public funds.
However, the general public tends to perceive infrastructure investment
as a waste of public funds mainly because of an history of earmarks
and allocation to trivial or even frivolous projects.
- Urban transit systems remain dominantly
publically owned and operated. Intercity is mostly private,
which brings the question about if city transportation would
gain to be privatized.
- Mergers and acquisitions between large
private or public entities in the transport sector are commonly
subject to regulatory approval. The Surface Transportation Board, the regulatory
agency controlling the railways, refused to sanction the proposed
merger between Canadian National and Burlington Northern and Sante
Fe Railroads in 2002. This was the first time in 20 years that the
regulator had turned down an application for merger. It cited concerns
of concentration of ownership.