US trucking and contract logistics giant Ryder Systems reported GAAP earnings before tax (EBT) growth of 17.5% y-o-y to $134m on revenues that improved 1.1% to $3,131m. Growth was due to the core strategy of insulating itself from the cyclical trucking industry in its Dedicated and Supply Chain Solutions businesses. CEO Robert Sanchez said, “I’m proud of our team for delivering double digit earnings growth in the first quarter. We remain on track to achieve expected benefits in 2025 from strategic initiatives that are well underway.”
Those initiatives are to focus more on the contract logistics Supply Chain Solutions (SCS) and Dedicated Transportation Solutions (DTS) businesses that are less exposed to the cyclical nature of US trucking than the legacy Fleet Management Solutions (FMS) truck rental arm.
Dedicated Transportation Solutions profit rockets
Though from a relatively low base, DTS reported an improvement in EBT of 50.0% y-o-y to $27m on revenues that grew 19.7% to $602m. CFO Cristina Gallo-Aquino said, the EBT growth reflected “Acquisition synergies as well as prior-year integration costs. DTS results also continued to benefit from strong performance of our legacy Dedicated business, reflecting pricing discipline as well as favourable market conditions for recruiting and retaining professional drivers.”
Supply Chain Solutions strong growth
Speaking of the SCS business, Sanchez said it “Delivered record first quarter earnings, reflecting the execution of strategic initiatives and new business.” The division reported EBT growth of 35.9% y-o-y to $87m on revenues that improved 0.1% to $1,331m.
Fleet Management Solutions hit by down-cycle
The truck rental arm FMS still accounts for 38% of Ryder’s revenues. This saw EBT down 6.0% y-o-y to $94m on revenues that grew 0.5% to $1,447m. Because this division relies on other trucking fleets that need extra capacity, FMS bore the brunt of the US trucking recession.
Looking forward – will Ryder outperform the economy?
Sanchez seems optimistic that his company will do well, regardless of the immediate future for the US economy. He said, “As a result of profitable growth in our contractual lease, dedicated and supply chain businesses, [Ryder is] expected to outperform prior cycles.”
Quizzed about the verticals to which the company is exposed given the volatile international trade climate in the US, Sanchez admitted that it is a case of swings and roundabouts for Ryder. Regarding the automotive vertical, he said, “The majority of these cars are sold in the US so we see very little impact there.” The same applies to consumer packaged goods. However, where it comes to omnichannel retail, he said the leadership team is watching this closely. “The majority of those customers have options in the countries they produce in. The ones that are shipping from China, there’s a slowdown there but the ones that are shipping from other countries, there’s an acceleration there.” However he said, “The majority of the work that we’re doing in supply chain is not seeing an impact at this point.”
Overall it seems that Ryder Systems’ strategy of reducing its exposure to the cycles of the US trucking industry is showing benefits to its bottom line. Given the generalised gloom in that market, this is no bad thing to be doing at the moment.
Author – Richard Shrubb
Source: Ti Insight
Supply chain strategists can use GSCi – Ti’s online data platform – to identify opportunities for growth, support strategic decisions, help them stay abreast of industry trends and development, as well as understand future impacts on the industry.
Visit GSCI subscription to sign up today or contact Michael Clover for a free demonstration: [email protected] | +44 (0) 1666 519907
For your logistics and transportation management needs
Providing high frequency logistics and supply chain data and analysis for all those invested in the industry.