Section 6: Conclusions
Section 6: Conclusions
This study estimates MFP in truck transportation, over 1987-2003; compares truck MFP to that of other transportation industries and the U.S. private business sector; and assesses the factors that affected changes in truck MFP over time.
With regard to estimation, the calculations are based on two methodological approaches to estimate MFP: 1) the methodology using the basic growth-accounting approach; and 2) the more complex Tornqvist index approach. With respect to the results, the MFP calculations based on the basic growth accounting methodology, and without land, can be divided into three time subperiods: 1987-1995, 1995-2001, and 2001-2003. During the first subperiod (1987-1995), truck MFP increased; during the second subperiod, truck MFP decreased; and during the third subperiod, (2001-2003), truck MFP again increased. With respect to MFP calculations using the Tornqvist methodology, and without land, the MFP growth numbers are very similar to, and the trend is the same as, those of the basic growth accounting methodology. That implies that either method can be used to provide appropriate estimates of MFP.
When MFP calculations use the Tornqvist index and include a measurement for the land input (similar to the method of BLS), the results of truck MFP are very similar to those noted above (obtained by either the basic growth-accounting methodology or the Tornqvist index). However, the measurement of land was not direct; it was related to changes of the stock of structures. In future work of BTS, land will be measured by other methods.
According to the MFP results, truck MFP increased at an annual rate of 0.8% over the whole period of analysis. With regard to the subperiods, truck MFP increased at an annual rate of 2.0% during 1987-1995; it decreased at 0.8% annually during 1995-2001; and it increased again during the most recent 2001-2003 period, at 1.1% per annum.
With regard to MFP comparisons, MFP in trucking is compared with that of the U.S. private business sector and the air transportation and train transportation subsectors. All series cover the period 1987 to 1999; so, MFP growth rates can be compared over that period. During that period, truck MFP and air MFP increased at similar annual rates each, of 1.2% and 1.3% respectively, while rail MFP increased at the highest annual rate of 3.3%. All three transportation industries experienced growth rates of MFP that were higher than those of the U.S. business sector of 0.9% per annum.
In addition, during 1987-1995, truck MFP increased at a faster rate, of 2.0% per annum, than air MFP, which grew at 1.2% annually. During this time period, truck MFP also grew at a substantially higher rate than that of the U.S. economy (of 0.6%). Also, truck MFP reached higher levels than air MFP for most years of the period of analysis. In 1999, however, this situation was reversed and maintained until 2001.
Truck MFP was at a higher level than that of the U.S. business sector for virtually every year over the period of 1987-2002. Consequently, over this time period, truck MFP contributed positively to increases in multifactor productivity of the U.S. economy. Only during 2001 and 2002 did the level of truck MFP fall slightly below that of the U.S. business sector.
With regard to factors affecting truck MFP, the analysis of truck MFP was also segmented into three periods: 1987-1995, 1995-2001, and 2001-2003. During the first period1987 to 1995truck MFP increased; during the second period1995 to 2001truck MFP decreased; and during the third period2002 to 2003truck MFP increased again.
Table 14 presents the various factors which affected truck MFP and indicates the directional impact of these factors on truck MFP, by a plus (+) or minus (-) sign. For example, a plus sign would mean that the factor impacts MFP in a positive way during that period, whereas, a minus sign impacts the MFP in a negative way.
The increase in truck MFP during 1987-1995 would seem to have been affected by the following factors: 1) The relatively high increase in capital per worker, including a rapid increase in the use of computers and computer software; this would have contributed to improvements in the quality of capital; 2) An improvement in the fuel efficiency of truck engines that was a result of improvement in the quality of capital; 3) An increase in the average length of haul; 4) An increasing use of containers in truck transportation; and 5) The positive impacts on industry efficiency as a result of interstate deregulation in 1980, including the increase in the TL segment of the industry.
In the second subperiod, 1995-2001, there was a decrease in truck MFP. This would seem to have been affected by the following factors: 1) The declining efficiency of utilizing intermediate inputs; 2) A lower growth rate of capital per worker; 3) A lower growth rate of utilizing containers; 4) The decrease in industry output in 2001, as a result of the economic recession that year, and the catastrophic events of 9/11/2001; 5) State deregulation of trucking in 1995; this was followed by a period of adjustment and uncertainty, which appear to have had a negative impact on truck MFP.
The increasing MFP during the last subperiod (2001-2003) seems to have been affected by the following factors: 1) Increased use of computers; 2) Increases in the efficiency of using intermediate inputs; 3) Increases in the use of containers; and 4) The adjustment of the industry following intrastate deregulation in 1995, which completed and made comprehensive the deregulation of truck transportation.
With regard to the contribution of trucking to the economys multifactor productivity, data show that over 1978-2000, truck MFP increased at a higher annual rate than the U.S. business sector. Consequently, during this period of time, trucking MFP contributed positively and significantly to economy MFP increases. Productivity increases in the U.S. economy over time have contributed significantly to economic growth and to improvements in the standard of living in the country.