Long-Term Relationships in the US Truckload Freight Industry

This paper provides evidence on the scope and incentive mechanisms of long-term relationships in the US truckload freight industry. In this setting, shippers and carriers engage in repeated interactions under fixed-rate contracts that allow for inefficient opportunism. The main dynamic mechanism involves shippers using the threat of relationship termination to deter carriers from short-term opportunism. This threat and the potential of future rents induce more carrier cooperation. We test this mechanism against likely alternatives and analyze relationship scope for different carrier types. We find that incentive schemes do not exploit the full temporal and spatial scope of relationships. (JEL D22, D82, L14, L92)