4.1 The Staggers Act
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436
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History
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Feb 20, 2024
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docx
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Jane Doe
SCLM436 4.1 The Staggers Act The Staggers act of 1980 was successful in starting the evolution of the railroad industry which was previously in a financial decline. The staggers act of 1980 deregulated railroad rates in the U.S. and encouraged setting rates based on market competition rather than setting rates by the Interstate Commerce Commission. This allowed railroads to be more customer-focused and permitted a market-
based approach. The act also significantly reduced federal regulatory control over freight operations more than just setting rates. With the Staggers act, regulators now had to be more accepting of requests
from railroads to terminate unprofitable lines. Without the Staggers Act, railroads would have continued to go bankrupt. During the 1970s, over 21% of railroads were bankrupt. The industry would have continued to see falling average with the rate of return with a 2% average ROI in the between 1970 to 1979. Railroads that had once dominated transportation, were misaligned with demands. Railroads were not generating enough revenue for maintenance or reinvestments for expanding. Additionally, without the staggers act, railroads would have continued to lack funds to maintain tracks. The mileage of track that had to be operated at reduced speeds due to unsafe conditions would have significantly increased from the forty-seven thousand miles 40 years later. Railroads would have continued to be hazardous and dangerous to travel. The fundamental changes with the Staggers Act loosened regulatory restrictions on railroads and provided railroads with a greater independence in setting rates for contracts and services as well as having a greater freedom to enter or exit different rail markets. The deregulation from the Staggers act
enabled railroads to competitively price routes and services different than their competitors to empower them to have a competitive advantage. Setting prices based on the demand of the market would also permit railroads to operate more efficiently as rates were no longer adjusted industry wide by the ICC. Shippers also benefited from this as railroads also passed the cost savings on.
References
Association of American Railroads. (2021). The Staggers rail act 40th anniversary
. Retrieved from aar.org
campaigns: https://www.aar.org/campaigns/the-staggers-rail-act-40th-anniversary/
Kenton, W. (2021, February 7). Staggers Act
. Retrieved from Investopedia: https://www.investopedia.com/terms/s/staggers-act.asp
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