Liberalisation of railroad policy in North America

A dramatic and fundamental change has occurred in North American railroad policy in recent years. This chapter will detail the changes in policy which have taken place in both the US and Canadian systems of railroad regulation. In short, the main issues are as follows: the Canadian regulatory structure, basically unchanged since the National Transportation Act was passed in 1967, had allowed railroads considerable pricing freedom and contributed to a financially strong and competitive Canadian railroad industry. US railroads, by contrast, were overburdened by an outmoded regulatory framework that had evolved in that country, and found themselves hampered by regulations that were causing them to lose more and more traffic, contributing to a serious deterioration of the country’s entire railroad industry. As a result of pressures to save the industry from total bankruptcy, and coinciding with a general trend towards deregulation of US industry, the Staggers Rail Act of 1980 was passed granting substantial new freedoms to the railroads, including virtually complete pricing flexibility. The result was a move towards more innovative and competitive pricing schemes in the USA, a trend which greatly affected the Canadian railroad industry as well. This ultimately contributed to substantial deregulation in Canada. The following sections of the chapter will provide further details of these developments. We begin with background on US regulation and the movement to deregulation.