Ryder System, Inc.

FOUNDED: 1933

Contact Information:

HEADQUARTERS: 3600 NW 82nd Ave.
Miami , FL 33166
PHONE: (305)593-3726
FAX: (305)593-3336
URL: http://www.ryder.com

OVERVIEW

Ryder System is a transportation company that focuses on three areas: integrated logistics, truck leasing and rental, and public transportation services. To the general public, Ryder System has been best known for the leasing and rental of its yellow trucks. However, in 1996 the company sold its consumer rental business so it could concentrate on servicing other businesses. Truck leasing and rental remained Ryder's largest segment in 1997, accounting for more than 45 percent of its revenue; however, the company was focusing its energy on integrated logistics (see "Strategy"). The company also provides student transportation services and operates 9,567 school buses in 25 states. With revenue of almost $5.0 billion in 1997 and assets of $5.5 billion, Ryder System ranked 292 in the 1998 Fortune 500.

COMPANY FINANCES

In 1997 Ryder System sales rose 11 percent to $4.9 billion. The breakdown was as follows: full service truck leasing, 37 percent; integrated logistics, 28 percent; public transportation services, 11 percent; commercial truck rental, 9 percent; international, 9 percent; and other, 6 percent. The company recorded its best operating results from continuing operations since 1987: earnings from continuing operations were $160 million compared to a loss of $19 million in 1996. Between April 1997 and April 1998 Ryder's stock traded in a range of $29 to $40. Its dividend was $.15 per share.

HISTORY

Jim Ryder began leasing trucks to a local beer distributor in the Miami area in 1934. This venture made him, at the age of 21, the owner of the first truck-leasing firm in the United States. In 1939 Ryder took on a partner, Roy Reedy, and the business began to expand rapidly. In 1952 Ryder acquired the Great Southern Trucking Company for $2 million. Three years later, the merged firms were reorganized as Ryder System Inc., and the new company offered its shares to the public. Ryder System entered the one-way truck rental business in 1967. The following year it began its auto carrier operations, which involved transporting new cars from factories to dealerships.

In the early 1970s Ryder Systems experienced financial troubles because of its diversification program. Consequently, in 1975 founder Jim Ryder was forced to step down as company head. Ryder System's results improved under new leadership during the late 1970s. In the mid-1980s Ryder System expanded briskly: it made 65 acquisitions for more than __BODY__.1 billion. Ryder System entered the 1990s as a major player in truck and trailer leasing, automobile shipping, student transport, and aviation leasing and maintenance. By the late 1990s, however, the company had sharply changed direction and was concentrating on the integrated logistics business.

STRATEGY

Recently Ryder System has placed its primary emphasis on integrated logistics, which accounted for about 28 percent of its revenues in 1997. Integrated logistics is much more than simply hauling stuff from one place to another. As the company describes it, it is "the process of getting the right products to the right place at the right time in the right condition." Integrated logistics can therefore involve purchasing raw materials, warehousing, inventory management, distribution, and a range of other services. The objective is to minimize costs and increase efficiency by integrating a range of services necessary to bring a product to market. Ryder System management expected the total market for logistics services to grow to $20 to $30 billion by the end of the 1990s, compared with $5 billion to $6 billion in 1995.

INFLUENCES

After Jim Ryder took on Roy Reedy as partner in 1939, the two set out to create a trucking empire. The network of better highways that had been built in the 1930s supported their efforts. World War II also gave the company a boost, since it increased the demand for trucking services. Construction of the interstate highway system in the 1950s and postwar prosperity were further boons to the company. By 1952 the company's 1,300 trucks were generating $3 million in revenue.

The purchase of Great Southern Trucking in 1952 and 25 other companies in the late 1950s significantly expanded Ryder's operations. The company had some difficulty absorbing these companies, however, and bad debts mounted. But the introduction of a centralized accounting system in the early 1960s alleviated these problems and set the stage for further growth. In 1967 Ryder System introduced one-way truck rentals to compete with U-Haul, which had popularized the service several years earlier. Competition in this area from a growing number of rivals proved fierce. But Ryder System continued to put resources into the business and expanded its share of the market.

In the late 1960s and early 1970s Ryder System followed the then-current trend of diversifying into unrelated businesses. It bought trade schools, a temporary-help business, a mobile-home distributor, an insurance firm, and a petroleum company. The diversification program soon proved unsuccessful. When the company's transportation business also came under pressure in 1973 and 1974, Ryder System began to record losses. The board of directors eventually pushed out founder Jim Ryder in 1975. The new CEO, Leslie Barnes, dumped some of the money-losing acquisitions and refocused on Ryder System's transportation business. The company's full-service truck-leasing operations soon recovered, as did its business of transporting cars from the factory to the dealer.

Ryder System rode out the recession of the early 1980s well, using it as an opportunity to take over weaker competitors. It did get into a battle with Jim Ryder, who had started his own one-way rental business under the name Jartran. By 1982, however, Jartran was on its way to bankruptcy. Meanwhile, Ryder System's truck leasing and one-way rental businesses surged. Partly due to changes in tax laws, more and more fleet operators were turning the functions of fleet purchase, maintenance, and insurance over to Ryder System. Between 1984 and 1988 Ryder System's truck fleet almost doubled. In the oneway rental business Ryder System's market share reached 45 percent, equal to that of the traditional leader, U-Haul. In 1985 Ryder entered the school-bus leasing business and quickly became the second-largest private student-transport company in the United States.

Ryder also entered the aviation leasing field with its purchase of Aviation Sales Co. and other companies in the early 1980s. By late 1986 aviation services accounted for 20 percent of the company's revenue. In 1988, just a few years after entering the field, Ryder was the world's largest jet engine overhaul and rebuilding company, the largest aviation parts distributor, and one of the largest engine and jet-engine leasing companies.

CURRENT TRENDS

In 1997 Ryder System was a completely different company than it had been just ten years prior. Prompted by weak earnings in 1989, the company began to restructure its operations. It laid off workers and sold most of its insurance operations. It closed many offices and facilities. With the airline business weak, Ryder System discarded the aircraft leasing and maintenance businesses it had bought and built up just a few years before. In 1993 the company made a major effort to become more competitive with U-Haul in the one-way truck rental business. But after spending some $200 million on trucks and system upgrades, the company's results in this area remained disappointing. In 1996 Ryder System threw in the towel and sold its consumer truck rental business. A year later, it sold its automotive carrier operations.

While leasing and short-term rental of trucks to businesses remained its biggest revenue generator, Ryder System's main emphasis was on its logistics operations. In 1994 Ryder System bought LogiCorp., which processed shipments for global carriers. The acquisition helped Ryder System design sophisticated delivery systems and brought in many new customers. Revenues from the logistics business, which in 1994 totaled $646 million, more than doubled in 1997 to __BODY__.4 billion. Moreover, the profitability of these operations was improving. Ryder had a strong roster of logistics clients, including General Motors, Xerox, John Deere, and Whirlpool.

CORPORATE CITIZENSHIP

In 1996 Ryder System issued its first Environmental Progress Report. The report details the goals of the company's environmental program and the progress made toward those goals.The report is available to the public by calling or writing to the company.

Ryder System also maintains the School Bus Safety Site on the Internet. These pages offer safety tips on waiting for, boarding, riding, and exiting a school bus. The site's address is http://www.ryder.com/ryder/schoolbussafety/index.html.

GLOBAL PRESENCE

In 1997 revenue from Ryder's international division accounted for approximately 9 percent of total revenue, an increase of 28 percent from 1996. Ryder had operations in eight foreign countries: Canada, Mexico, Argentina, Brazil, the United Kingdom, the Netherlands, Germany, and Poland. Ryder System often has followed its customers into countries where they operate. For example, its first large customer in Mexico was Procter & Gamble, which was already an important domestic client.

SOURCES OF INFORMATION

Bibliography

"Allied Holdings Signs Definitive Agreement to Acquire Ryder Automotive Carrier Services." PR Newswire, 21 August 1997.

Barfield, Claude E., and Mark A. Groombridge. "A System America Wanted: World Trade Organization." Journal of Commerce and Commercial, 27 February 1998.

Bonney, Joseph. "Ryder Raises Its Stake in Logistics." American Shipper, April 1995.

DeGeorge, Gail. "Ryder Sees the Logic of Logistics." Business Week, 5 August 1996.

Fitzgerald, Mark. "Outsourcing Trend Benefits Ryder." Editor & Publisher, 16 August 1997.

La Monica, Paul R. "Ryder System Going Nowhwere?" Financial World, 16 September 1996.

Nakamoto, Michiyo, "Fugifilm Snaps Up Market Share in U.S." The Financial Times, 9 December 1997.

Reed, Tom. "Ryder Still Searching for Right Formula." Knight Ridder/Tribune Business News, 8 October 1995.

Riddle, J. Ernie. "Reengineering Ryder to Meet Rising Consumer Expectations." National Productivity Review, Winter 1995.

Rosenberg, Hillary. "M. Anthony Burns of Ryder System: Road Warrior." Institutional Investor, April 1995.

"Ryder System, Inc." Hoover's Handbook of American Business 1998. Austin, TX: Hoover's Business Press, 1997.

Spiegel, Peter. "Is He Paranoid Enough?" Forbes, 22 September 1997.

For an annual report:

write: Ryder, 3600 NW 82 Ave., Miami, FL 33166

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Ryder's primary SIC is:

7513 Truck Rental and Leasing, Without Drivers