Policy and Planning
The terms “Policy” and “planning” are used very loosely and are frequently interchangeable. However, substituting one for the other 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 direct policy context. However, precise definitions are not forthcoming, and the following are suggested:
Transport policy deals with developing a set of constructs and propositions that are established to achieve specific objectives relating to social, economic, and environmental conditions, 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 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 development programs, such as the Appalachia Project in the United States and the 1960s, the Trans-European Networks (TENs) policy in the EU, and China’s Belt and Road Initiative 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, which provided the United States with its network of expressways, was formulated on the grounds of national security. Security was at the heart of the more recent 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 working hours 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 fuel efficiency and emission standards. More recent policy endeavors concern reducing carbon emissions by the transport sector.
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 (close to) monopoly power. Such dominance brings into question many issues affecting the public interest such as access (smaller actors prevented to access infrastructure), availability (smaller markets being less serviced, or services being discontinued) and price (the monopolist being able 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 United States 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 restrictions, at times forbidding foreign ownership of several transport assets altogether. This challenges the growth and expansion of transnational managers and operators of transportation assets and the large financial institutions supporting them, such as sovereign wealth funds.
In recent years, four trends had significant consequences over the context in which the transport policy takes place:
- Globalization increased interactions at the international level, both for freight and passengers. This led 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 and regulations.
- Deregulation and privatization have been ongoing in many transport markets. This enabled the transfer of ownership and operation of many transport modes to the private sector and favored the entry of new actors. This was particularly the case of the airline industry.
- A broader focus of policies, particularly considering intermodalism and multimodalism, as well as logistics. This has enabled 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. The policy process 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.
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:
- A vital instrument concerns 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 such as airlines, railways, ferries, and urban transit 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 is 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 United States, the Jones Act, which 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. Most public transit systems are subsidized to provide mobility since full cost recovery would make fares unaffordable to the poorer segments of the population. 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.
- Regulatory control represents a means of influencing the shape of transportation that is 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. Environmental regulations are also important factors shaping the provision, construction, maintenance, and operation of transportation infrastructures. Thus, while private firms may offer the actual services, the regulator 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. Besides, 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. Still, as a policy, they may exert a significant effect on 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. Still, 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.
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 are dynamic. They change and evolve as circumstances change, and as new problems are recognized. The dynamic nature of policymaking 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. Historical examples of private transport provision include:
- 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.
- 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 Bridgewater Canal.
- 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 route systems.
- Most maritime shipping companies were private family-owned enterprises, 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 were developed by private companies during the 19th century. In North America, this has continued to the present day. In Europe, deregulation mainly resulted in the emergence of private carriers, but the infrastructure remained publicly owned.