Ryder System CEO Robert Sanchez expressed optimism about the state of the trucking market last week, emphasizing that the company is well positioned to weather economic challenges.
The company’s contractual, multiyear agreements serve as a buffer against sinking spot rates, Sanchez said during the Morgan Stanley Laguna Conference. Demand continues to outpace trucking capacity, he said.
“From a transportation standpoint, I think there’s still that imbalance of you’ve still got more demand for freight movement than you have trucks,” the CEO said. “Everybody’s preparing for some type of recession, though.”
More than 85% of Ryder’s revenue is contractual, recurring revenue generated from its supply chain, dedicated and leased businesses, Sanchez said during a Q2 earnings call in July.
On the other hand, the CEO noted at the conference that the two areas in which the company would be most negatively impacted by a recession are its used trucks and rental business.
Ryder’s used trucks and rental sales surged during the pandemic, but are expected to fall back to pre-pandemic levels. Rental power-fleet utilization reached a record 84.5% in Q2, up from 79.6% YoY, according to a quarterly report.
“It’s very high, certainly very high for a second quarter,” Sanchez said during the conference, adding, “We expect those utilization levels will normalize in a slowdown” to a rate in the mid- to high-70s.
The carrier also expects record-high used truck prices to moderate in the second half of this year. In July, the company reported that from Q1 to Q2, used vehicle prices increased 9% while used tractor prices declined by 5%.
"Used vehicle market conditions remain strong despite a modest decline in sequential tractor pricing, consistent with our expectations,” Sanchez said in a statement in July. “We continue to anticipate that the historically strong used vehicle sales and rental market environment will moderate in the second half of the year, with slower freight growth partially offset by ongoing tight market capacity.”