The truckload (TL) sector's hopes for a recovery in 2009 can be summarized in two words—fuel and capacity.

Fuel costs in some cases have exceeded labor as the highest expense for some big TL carriers and have surged to record-breaking levels; while fuel surcharges have helped blunt the record rise in diesel costs.

Shippers are paying as much as 50 percent in surcharges on a typical TL freight bill. But some TL carrier executives admit privately there is no sufficient business model to cope with $135-a-barrel crude oil or $4.50-a-gallon diesel.

But some shippers are pushing back on fuel surcharges; and that is causing much angst among TL executives who worry how high fuel surcharges can rise before shippers revolt—or bolt.

All this has caused many large TL carriers to reduce their over-the-road capacity in favor of shorter regional freight routes and intermodal for longer hauls. Among the carriers doing this are J.B. Hunt, Werner Enterprises, and Knight Transportation. All told, TL capacity dropped 3.6 percent the first two months of this year, according to a survey by the American Trucking Associations (ATA), the largest drop in capacity since it began its survey in 1997.

There are exceptions: Schneider National, the nation's second-largest TL carrier, has increased over-the-road capacity by 7 percent in the past 15 months. Celadon, a major north-south TL carrier which gets about half of its $501 million annual revenue from traffic in and out of Mexico, says it raised capacity by a similar amount in the past 15 months.

The overcapacity that has plagued the TL sector since the record level of Class 8 truck sales in 2006 (280,000 units sold, compared to 145,000 last year) is just about over, analysts say. Thom Albrecht, trucking analyst for Stephens Inc., is anticipating that supply and demand will be close to equilibrium by the end of this year's third quarter.

He says it's too early to tell whether truckload rates will recover in a “V-shaped” manner or at a more gradually paced “U-shaped” curve. Still, Albrecht says the stage is being set for 2009 to represent a “meaningful recovery” for the TL sector.

Such a recovery may come at the expense of some smaller, less financially stable carriers. Already nearly 1,000 mostly small TL carriers have ceased operations this year. Albrecht is predicting “at least a couple thousand more casualties” this next year as the pain of $4.50 per gallon diesel fuel prices (or higher) takes their toll.

So, the word for TL shippers in 2008 is this: Enjoy the break in rates that you've experienced over the past two years because when the recovery hits, capacity may not be sufficient. That will surely mean sharply higher rates.