Ryder trucks

US forwarder and truck lessor Ryder saw its first-half revenues grow year-on-year by 4% to reach $3.29bn. Profits for the first six months grew a significant 22% to reach $124.8m, against the $103.4m achieved in the same period last year.

The company is a strange hybrid – a freight forwarder that also has a large asset base from which it derives significant leasing revenues – which earned it $2.32bn in the first six months of the year, compared to the $1.22bn revenues that came from its supply chain solutions division, which represented a 5% growth.

However, supply chain division earnings before interest and tax were down 9% to $52.5m due to the loss of some business and start-up costs associated with a new account, said chief executive Robert Sanchez.

While its fleet management services appear to be benefiting from the upturn in the US economy and the demand for more capacity, its logistics arm was hit with the loss of two automotive contracts, although John Williford, president of the company’s global supply chain solutions division, claimed that its pipeline of business was “very strong”.

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“We sold a record amount in the first half and we will grow eventually – the growth rate is likely to drop a little in the third quarter due to the loss of the automotive contracts and the start-up costs, but will come back in the fourth quarter and will be very strong in 2015.

“We have won a lot of projects recently in contract logistics, consumer packaged goods and hi-tech and we have a lot of business scheduled to come in and it will begin to impact from the fourth quarter onwards.”

He said the two automotive contracts it lost were “low margin accounts” that had reached the end of their term and were lost when re-tendered, “which was mostly to do with price and were won by competitors offering lower rates”.

The company has been keen on entering new sectors, especially the retail and consumer markets, and reducing its dependence on the automotive and electronics sectors – a reliance that some observers perceive as a potential weakness.

In addition, Ryder’s almost total dependence on the US market has left it unable to take part in the faster rates of growth on offer in many emerging markets.

According to the recent Transport Intelligence (Ti) into contract logistics providers, the company suffers from a lack of international clout, having effectively shut down its international operations as the recession kicked in. Some 84% of its revenues are earned in the US market.

“Ryder has to solve the problem of its failure outside the US. At some stage it must globalise if it is to continue to be a big player. The inability to establish successful largescale operations outside of the US leaves Ryder vulnerable to any deterioration in the US market,” Ti said.

However, its huge asset base – it owns around 70,000 trucks, 60,000 tractors units and 40,000 trailers – could also be an advantage, as it gives the company a scale to broaden into new service segments, said Ti.

“Potentially Ryder’s physical resources could enable it to evolve new services in areas such as fulfilment,” it said, referring to one sector in which it is perceived to continue to be weak: “Failure to re-position strategically in the face of e-commerce could leave Ryder vulnerable to being side-lined in its new market of retail and consumer.”

 

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