FOR EVERYONE ELSE: THE TYPICAL TRANSPORTATION INDUSTRY STRUCTURE
The highway, water, and air transport modes have maintained or expanded market share in the growing economy of the last several decades. The railroads have lost market share. The advantage of the first three modes is their "typical" industry structure. The success of this structure stems from its encouragement of competition and diversity as constructive forces.
To understand the structural reasons for the success of the highway, water, and air modes of freight transportation and the relative decline of the railroads, the structures of each mode must be examined. This chapter explores the typical structure shared by the highway, water, and air modes. The following chapter describes the railroads' industry structure.
Industry structure encompasses the physical components of a transportation mode, the public and private entities which control the components, and the operating relationships between the entities.1 The physical components can be categorized as fixed ways and carriers, the latter encompassing terminals. These categories serve as demarcations of the owning entities and as divisions within companies which own multiple components.
The typical transportation industry structure can be described as privately owned carriers operating over a publicly owned, jointly used fixed way. In contrast, the railroads operate as privately owned carriers over privately owned fixed ways, with each fixed way reserved for the exclusive use of its owner-carrier.
The typical structure utilizes publicly owned, jointly used fixed ways. Highways, waterways, and airways are all built or improved with public funds.2 Ownership and control of the fixed ways rests with government agencies at several levels. Fixed way physical components vary according to the mode under study, but all modes require maintenance and traffic control for their fixed ways.