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rying to balance the supply of truck capacity with the needs of the nation’s shippers is no easier task than what the Federal Reserve Board tries to do in balancing economic growth and inflation.

After several dismal recession years, trucking has enjoyed far better financial times over the past two years as the nation’s economic recovery has boosted freight demand.

Thanks in large part to the demise of many carriers during the bad times, truck capacity has been very tight during the recovery, which has allowed fleets to raise prices and to pass sky-high fuel prices along to shippers.

Most fleets have been cautious about expanding in the past two years, even as business has improved. No one in trucking wants a repeat of the overcapacity of the recession years that led to freight prices too low to sustain them.

Last week’s warning from Morgan Stanley, the large investment house, that it believes overcapacity is already creeping into the less-than-truckload sector and likely to reach the truckload sector next year, is likely to send shivers down many spines.

Morgan Stanley analysts Jim Valentine and Chad Bruso said their own survey of 210 fleets showed that privately held LTL fleets are expanding so quickly that sector prices are likely to decline because of oversupply.

While Morgan Stanley’s primary interest was to warn its clients that trucking stock prices, which are at historical highs in many cases, are likely to decline, the news could have far wider ramifications.

In addition, the analysts said they believed that the truckload sector, again driven in large part by expansion of smaller, privately held fleets, could also move into an overcapacity situation during 2006.

That is not good news to fleets that are trying to replenish their coffers after the lean years.

Clearly, a wild card that can’t be addressed by the analysts is just how fast the U.S. economy will grow this year, which will have a lot to do with how close shipper demand matches fleet capacity.

And several LTL executives told Transport Topics that prices remained firm and that they didn’t see evidence of oversupply at this time.

But the Wall Street warning is worth noting by all. While trucking’s crystal ball is unlikely to be more accurate than the Fed’s, there is widespread evidence that fleet size is growing.

Let’s hope that we’re not headed for another period of oversupply, which would return instability to the economic underpinnings of the trucking industry.

This story appeared in the Jan. 17 print edition of Transport Topics. Subscribe today.