Ryder System’s e-commerce logistics revenues now “in the mid $300 million range”


In Ryder’s first quarter earnings call, CEO Robert Sanchez stated that Ryder’s e-commerce logistics revenues now amounted to over $300m on an annualised basis. This suggests the company is now one of the leading e-fulfilment logistics players globally.

He stated: “The combination of Ryder’s prior business plus MXD puts our annual e-commerce and final mile revenue for SCS and DTS in the mid $300 million range with additional revenue in FMS supporting e-commerce activity.”

This is despite the fact that Ryder’s logistics businesses are only exposed to the North American market.

Ryder’s e-commerce revenues have bumped thanks to its acquisition of MXD Group, announced earlier in April. At a cost of approximately $120m, the deal added 109 facilities to Ryder’s network which now includes 121 e-commerce hubs covering more than 95% of the U.S. and Canada within a two-day delivery timeframe. The network can serve any industry, handling big and bulky products as well as small and large parcels.

MXD Group’s revenues were not disclosed at the time of the acquisition, although Ryder’s CEO stated that “more than half” was coming from MXD.

It is safe to say that Ryder has moved into the upper echelons of e-commerce logistics providers. In Global e-commerce Logistics 2018, Ti spelled out the structure of the e-commerce logistics market and estimated the number of LSPs in various revenue tiers.

Ryder is focusing on something of a niche on the last-mile side, primarily dealing with big and bulky products, claiming to be the second largest last mile delivery provider of such goods in the US.

On the fulfilment side, Ryder is firmly now in a second tier of providers (at the global level), those with revenues in the region of €100m to €500m. Research in Global e-commerce Logistics 2018 suggests that there are only two traditional LSPs with revenues in excess of €500m. Elsewhere, the world’s major online retailers (Amazon, Alibaba and JD) are in a league of their own when it comes to e-fulfilment logistics revenues and represent a major competitive threat to traditional LSPs, while major retailers, niche LSPs, start-ups and others are very much part of the landscape too.

Another business development that the earnings call provided colour on was Ryder’s new digital platform for commercial vehicle sharing, COOP, announced in late March. The platform offers businesses the opportunity to list and rent underutilized commercial vehicles within a network of trusted peers.

Following a pilot phase, COOP was fully launched in Atlanta in April, the first truck sharing platform for commercial vehicles. Ryder is essentially providing customers the opportunity to monetize underutilized vehicles, while creating a new asset light revenue stream for themselves. It expects to expand the geographic footprint of COOP further in 2019.

One perhaps under-recognised opportunity for the product upon launch was the notion that it could provide Ryder with substantial surge capacity. Ryder’s CEO stated: “If you think about it, what COOP could do over time is really provide us with a significant supply of surge capacity vehicles in the marketplace, which means Ryder and others may not have to go out and purchase as many surge capacity vehicles during the upturns. So you’re not having as much volatility on the downside. So I think that’s the longer term outcome.”

He continued: “It could also mitigate our reliance on making capital investments for rental or certainly to the extent that we’ve been making them over the history of the company.”

What these developments highlight is that Ryder should not be perceived as being a traditional truck leasing company and manufacturing contract logistics specialist. While strong in these areas, its e-commerce advance will even its logistics revenue share between CPG & retail and manufacturing. Fundamentally, this and the COOP project show Ryder is a company moving with the times, willing to adapt when opportunities arise outside of its historical strengths.

Source: Transport Intelligence, April 25, 2018

Author: David Buckby

GSCi

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