Ryder System (R) Deutsche Bank’s Chicago Industrials Summit summary

Business overview and transformation

• Operates a $13 billion B2B transportation logistics business in North America, organized into Fleet Management, Supply Chain, and Dedicated segments.

• Transformation since 2019 focused on de-risking leases, enhancing margins, and diversifying with accelerated Supply Chain and Dedicated growth.

• Supply Chain and Dedicated now represent 60% of revenue, up from 44%, with cash flow from operations up 60% and profitability more than doubled.

• Return on equity improved to 18%, up from 13% at the last cycle peak, with further gains targeted.

• Transformation initiatives, including a $100 million maintenance productivity program and lease repricing, are nearly complete.

Market conditions and outlook

• Freight recovery is supply-driven, with capacity removed from the market, leading to higher spot rates and used vehicle pricing.

• Used vehicle pricing improved 5% year-over-year, with expectations for double-digit gains as market tightens into next year.

• New vehicle pricing is rising due to upcoming EPA regulations, with anticipated high single to low double-digit increases.

• New truck orders are still below replacement levels, mostly reflecting deferred replacement rather than growth.

• Market may shift to fleet growth in 2027 if order trends continue upward.

Customer dynamics and value proposition

• Smaller carriers face challenges from rising costs and regulatory uncertainty, making long-term commitments difficult.

• Leasing and Dedicated offerings are increasingly attractive as they help customers manage rising equipment, insurance, and labor costs.

• Rental business serves as a gateway for customers, with many starting with rentals before moving to leases and Dedicated solutions.

• About one-third of contracts are repriced annually, with tightening driver markets expected to drive wage inflation.