Reducing Costs, Increasing Efficiency, and Improving Safety for US Freight Transportation | Global Trade Magazine
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  July 10th, 2017 | Written by

Reducing Costs, Increasing Efficiency, and Improving Safety for US Freight Transportation

Report Finds Progress Often Stymied by Restrictive Regulation

Sharelines

  • Railroads, trucking, and aviation are ripe for automation that will improve safety.
  • Six principles to improve regulatory balance between protecting safety and encouraging technologies.
  • Technology is enabling greater automation in trucking, aviation, and railroads.

Railroads, trucking, and certain types of aviation are ripe for automation that will improve the safety and efficiency of United States freight transportation, but ill-balanced regulations prevent companies and consumers from capitalizing on these opportunities, according to a new report from the Information Technology and Innovation Foundation (ITIF).

ITIF, a tech-policy think tank, outlines six principles policymakers should heed to improve the regulatory balance between protecting safety and encouraging promising technologies to ensure the US economy is maximizing competitiveness and productivity.

“Technology is enabling a much greater degree of automation in trucking, aviation, and railroads,” said Joe Kennedy, ITIF’s senior fellow and the report’s author. “Each industry is also struggling to integrate this new technology because of overly restrictive and unbalanced regulations. Done right, automation can increase productivity, lower costs, reduce accidents, and ease labor shortages. Regulators need to get the balance right between innovation and safety to maintain our national competitiveness in leading industries while increasing productivity and raising living standards.”

To achieve a better balance, the report urges policymakers to follow six core principles for regulation:

Welcome technology. Regulators should start with the premise that technological progress can solve many problems. For example, regulators should assume that, given enough time and guidance, manufacturers can develop solutions to the safety problems posed by drones. They should therefore encourage the industry’s development.

Acknowledge the other forces encouraging companies to act responsibly. Many market and legal forces rein in company behavior even absent regulation. For example, when United Airlines recently asked airport police to take a passenger off a plane, the incident became national news within a day, causing a drop in the stock price and the loss of a promotion for the CEO. The public relations reaction was enough to make regulatory action an afterthought.

Allow for different futures. When regulators create rules for an industry, they should avoid policies that favor a particular technology or business model. Regulators should be agnostic about which of several particular technologies will win out in the race to build autonomous cars. Yet the Federal Railroad Administration recently issued a proposed rule restricting the implementation of technology-enabled, one-person crews without first developing a sound factual record justifying the rule.

Distinguish between substantially different technologies. Regulators should recognize the diversity of technological solutions and tailor regulation to specific technologies, rather than treating substantially different technologies the same. Each technology brings certain strengths and weaknesses, and rules that make sense for older technologies are not always needed for newer ones. For example, federal policy has drawn a distinction between technology that assists drivers while they are in control and technology that largely replaces drivers, subjecting the former to relatively little regulation.

Provide regulators the necessary resources. Congress should provide regulators the necessary resources to make timely and correct decisions. Too often, the agencies serve as training grounds from which their best employees leave for more lucrative salaries in the regulated industry.

Make timely regulatory decisions. Regulators should make timely decisions to keep up with the pace of innovation. The formal regulatory process can take over two years. Even then, the final rule may be held up in court challenges for several more years. This makes it hard to adapt regulatory rules to an industry experiencing rapid changes. For example, the National Highway Traffic Safety Administration took several years to issue any guidance on the development of autonomous vehicles.

“It is essential that the United States remain at the forefront of developing automation technologies to maintain the competitiveness of both the industries that produce technology and the industries that use it,” said Kennedy. “Automation will also increase productivity and living standards, benefiting consumers across the country.

“The fast pace of technology would likely challenge regulators even in the best of times,” he added. “In the face of budget cuts, the task will be even harder. The regulator’s job should be to encourage technological development while ensuring public goals such as safety with flexible rules that accommodate the new wave of advancements we are seeing across the freight industry.”

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