Former President Jimmy Carter died Sunday at the age of 100.
Carter was born in 1924 in Plains, Georgia, the son of a nurse and a local businessman. He served as a Naval officer for seven years before returning to Georgia and taking over his family’s farm. He soon entered local politics. He was the governor of Georgia from 1971 to 1975 and served as president from 1977 to 1981.
“Jimmy Carter aspired to make Government ‘competent and compassionate,’ responsive to the American people and their expectations,” reads the biography written by the White House Historical Association. “His achievements were notable, but in an era of rising energy costs, mounting inflation, and continuing tensions, it was impossible for his administration to meet these high expectations.”
His strides in promoting peace and human rights before and after his presidency won him the 2002 Nobel Peace Prize. As president, he brokered the Camp David Accords between Israel and Egypt, establishing full diplomatic relations with China, and signing the SALT II treaty, aimed at limiting nuclear weapon development, with the Soviet Union. Afterward, he and his nonprofit, the Carter Center, engaged in conflict mediation across the world. He and his wife, Rosalynn, were also noted for their regular participation at Habitat for Humanity.
Less frequently discussed is his presidential tenure’s massive influence on freight transportation. Soaring inflation, particularly rising energy costs, helped bring about the Air Cargo Deregulation Act of 1977, Staggers Rail Act and the Motor Carrier Act of 1980. They, respectively, deregulated the nation’s air cargo, rail and trucking networks. In each industry, rates greatly declined as a result of deregulation.
Freight deregulation was key to our modern, robust supply chains where customers can find just about anything in retail stores across the country, and next-day shipping is the norm. Carter’s deregulatory policies led to a supply chain that’s focused on low inventories and just-in-time deliveries — for better or for worse. And they helped foster consolidation in the rail industry while sparking massive competition in trucking.
Meanwhile, in ocean trade, Carter also signed a set of treaties in 1977 that pledged to transfer control of the Panama Canal to Panama by 2000.
Here are four ways Carter’s presidential tenure shaped freight transportation.
The Air Cargo Deregulation Act of 1977 kicked off Carter’s zeal for transportation deregulation
Historic inflation in the late 1970s and early 1980s gave even Democrats like Carter the enthusiasm for deregulation. Alfred Kahn, who was Carter’s so-called “inflation czar,” was keen on deregulating industries that could have been quiet contributors to elevated sticker prices.
First up was deregulation of air cargo. Airline carriers claimed before deregulation that air cargo rates, which were set by the federal government, were too low to profitably operate. Air cargo deregulation also allowed free entry into the industry — but launching one’s own airline is so pricey that there was hardly a melee of new operators following this move.
The Air Cargo Deregulation Act of 1977 is often overshadowed by passenger air deregulation in 1978. Consumers could more easily understand the impact of that deregulation on their day-to-day lives, but it’s difficult to imagine the rapid growth of e-commerce and retail supply chains without economical airfreight.
One key company that was involved in lobbying for this deregulatory law benefited in particular: Federal Express. Prior to deregulation, what’s now called FedEx Express had just a few small jets. The removal of federal rate-setting regulations allowed Frederick Smith, the founder of FedEx, and his team to acquire seven Boeing 727s and go public on the New York Stock Exchange the following year.
Today, according to the latest numbers from the International Air Transport Association, FedEx Express is the top cargo airline by volume.
Torrijos-Carter Treaties relinquished control of the Panama Canal to Panama
With U.S. military help, Panama won independence from Colombia in 1903. Following that, the U.S. gained access to a 553-square-mile area in Panama, which became an unincorporated territory of the U.S. Until 1914, the U.S. undertook the massive, yearslong effort to dig the 40-mile-long canal.
It’s hard to picture ocean trade — or, indeed, the U.S. becoming a global power — without the Panama Canal.
“[T]he economic impact was massive,” Ovidio Diaz-Espino, a Panamanian author and lawyer, told PBS NewsHour in 2014. “Now you could unite the trade between the two oceans. Starting in the 1890s, and until WWI, global trade was just as significant as it is now, so it was important to have a commute route across the continent.”
The continued U.S. control of the Panama Canal Zone sparked tensions and protests in Panama. One uprising in 1964 turned violent; over the course of a three-day period, 22 Panamanians and four U.S. soldiers died in the uprising, which is still commemorated in Panama as Marytrs’ Day.
The Carter administration prioritized the transition of the Panama Canal back to Panama. Along with concerns with Panama’s government, which was perceived at times to be hostile to the U.S., critics didn’t agree with this transition because they weren’t sure if Panama would be able to maintain the canal.
The 1977 agreements gave the U.S. the permanent right to defend the canal, which, under Panama’s control, must allow ships of all nations to pass through. Omar Torrijos, commander of Panama’s National Guard, represented Panama in the treaty.
What’s more, the canal under Panama’s control has remained a foundational, functional part of global trade. Some 14,000 ships pass through it every year. An expansion project to widen the canal was completed in 2016. And, amid a shift from shipping goods to East Coast ports in the U.S. rather than the West Coast, the Panama Canal will likely become more important than ever.
The Motor Carrier Act of 1980, signed by Carter, deregulated trucking — with massive implications for consumers
Prior to the 1980s, the trucking industry was incredibly challenging to enter. One needed a route from the Interstate Commerce Commission — or to buy a route from a trucking company that already had one. Even becoming a truck driver was a feat; America’s trucking companies were largely unionized and such jobs were hard to land.
Such tight entry controls were good for the trucking industry. The eight largest trucking companies of the pre-deregulation era earned a rate of return on equity twice that of the typical Fortune 500 company, according to “Braking the Special Interests,” a book about trucking deregulation by Dorothy Robyn.
However, the ICC’s regulations increased trucking rates. As economist Thomas Gale Moore, who served in the Reagan administration, wrote in 1993:
“Products exempt from regulation moved at rates 20 to 40 percent below those for the same products subject to ICC controls. For example, regulated rates for carrying cooked poultry, compared to unregulated charges for fresh dressed poultry (a similar product), were nearly 50 percent higher.”
Those costs would eventually trickle down to consumers — and Washington wasn’t happy about that. Presidents Truman, Nixon and Ford all attempted to deregulate trucking during their tenures but faced strong Teamsters resistance. The Carter administration would overcome that hurdle.
After a tumultuous political battle, Carter signed the Motor Carrier Act of 1980 on July 1. He said consumers would save some $8 billion a year, or $29 billion in 2023 dollars, thanks to these deregulated routes.
“People were worried about inflation,” Kahn told PBS in a 2000 interview. “Here we had a protectionist regime that prevented competition, that kept truckers from competing with one another. … I used my office — futilely in a sense at the macroeconomic level — to accomplish something for the microeconomic level, which, you know, I think had had some significant role in the recoveries and growth of the last 20 years.”
Like air cargo deregulation, the rollback of federal control over trucking rate setting and entry led to a massive decline in rates.
However, it also sparked what some have called “destructive competition,” with hundreds of thousands of trucking firms competing over a set amount of freight. That leads to massive boom-and-bust cycles in the trucking industry.
Immediately following trucking deregulation, hundreds of trucking firms that flourished during the regulated era filed for bankruptcy. Most of those firms were unionized — and the trucking companies that replaced them were almost always not unionized. As a result, trucking deregulation, while likely lowering prices for everyday consumers, also eliminated thousands of unionized jobs.
Carter signed the Staggers Act in the fall of 1980, which transformed rail
Months after trucking deregulation, Carter signed into law the Staggers Act. Like deregulation in air and trucking, this law allowed rail carriers to establish any rate for a given rail service and without submitting contracts for review to the ICC. Rail carriers could also more easily abandon track that wasn’t economical.
Unlike trucking, prior to deregulation the U.S. rail industry was economically suffering. For example, the expansion of the highway system meant rail had to compete with trucking — a far quicker and more efficient means of moving freight. Government regulation on rail rates also meant that carriers struggled to price freight for different types of shippers. (Today, rail companies typically price so-called “captive shippers” like chemical manufacturers higher than intermodal ones, which can use trucking services. That allows them to capture more share from the trucking industry and subsidize the pricey undertaking of maintaining track and rail equipment.)
Carter believed that deregulating rail would slash transportation costs (which it certainly did) and make the rail industry healthier. Today, some lawmakers have slammed the rail industry for over-consolidation — with some wondering if rail is more interested in profits than investing in its infrastructure and employees.
“By stripping away needless and costly regulation in favor of marketplace forces wherever possible, this act will help assure a strong and healthy future for our Nation’s railroads and the men and women who work for them,” Carter said upon signing the Staggers Act on Oct. 14, 1980. “It will benefit shippers throughout the country by encouraging railroads to improve their equipment and better tailor their service to shipper needs. America’s consumers will benefit, for rather than face the prospect of continuing deterioration of rail freight service, consumers can be assured of improved railroads delivering their goods with dispatch.”