Canal carriers and creative destruction in English transport

Canals played a key role in the industrial revolution by creating the infrastructure for inland waterway transport. Public carriers responded to canals and the growing demand for transport by innovating in service speed, quality, and reliability. How did their innovations affect the transport market, especially road carriers? One hypothesis is that road and canal carriers complemented one another, offering services with different speeds and prices. Another sees them as competitors with canal carriers winning based on their lower operating costs. We test these hypotheses using London trade directories, which detail road and waterway services from London to most towns and cities from 1779 to 1827. Our main results show that introducing the standard canal barge service between London and a major city had no effect on the number of road carrier services supplied to that same city-pair. By contrast, introducing an express canal service, known as the fly boat, significantly reduced road carrier services supplied. Fly boats are found to have weaker competition effects if the ratio of waterway to road distance was greater and on short and long route distances. The results provide new insights on the importance of speed and service innovation during the industrial revolution.