Glossary
Rule of Eight
Tags: Glossary
Before the Motor Carrier Act of 1980, contract carriers requesting authority were restricted to eight shippers under contract. The number of shippers has been eliminated as a consideration for granting a contract carrier permit.
What is Rule of Eight?
The Rule of Eight, also known as the Eight Shipper Rule, was a regulation that governed contract carriers in the transportation industry prior to the Motor Carrier Act of 1980. Under this rule, contract carriers were limited to having contracts with only eight shippers. However, with the implementation of the Motor Carrier Act of 1980, this restriction was eliminated, and the number of shippers became irrelevant when granting a contract carrier permit.
The Rule of Eight was initially put in place to regulate the operations of contract carriers and prevent monopolistic practices. By limiting the number of shippers a carrier could have contracts with, it aimed to ensure fair competition and prevent carriers from dominating the market by exclusively serving a large number of shippers.
However, as the transportation industry evolved and the need for more flexibility and efficiency increased, the Rule of Eight became outdated and restrictive. The Motor Carrier Act of 1980 was a significant milestone in the deregulation of the transportation industry, aiming to promote competition, reduce barriers to entry, and increase efficiency.
By eliminating the restriction on the number of shippers, the Motor Carrier Act of 1980 allowed contract carriers to enter into contracts with as many shippers as they deemed necessary or beneficial. This change opened up opportunities for carriers to expand their customer base, diversify their operations, and better meet the needs of the market.
The elimination of the Rule of Eight also had a positive impact on shippers. It increased their options and allowed them to choose from a wider pool of carriers, fostering competition and potentially leading to more competitive pricing and improved service quality.
In conclusion, the Rule of Eight was a regulation that limited contract carriers to having contracts with only eight shippers. However, with the implementation of the Motor Carrier Act of 1980, this restriction was removed, allowing carriers to enter into contracts with any number of shippers. This change promoted competition, increased flexibility, and benefited both carriers and shippers in the transportation industry.