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A Conversation with Ryder CEO Robert Sanchez

Keeping An 80-Year-Old Company Innovative

A Conversation with Ryder CEO Robert Sanchez

Ryder trucks have been traveling North America’s highways and roads for so long that, for most people, two words come to mind when they see that famous red logo: truck rental. But Ryder is as much a truck-rental company as, say, Google is a search engine. Today’s Ryder is a diversified, creative, $6.6 billion logistics, supply-chain, and fleet-management company with 30,000 employees (including nearly 7,000 drivers) and thousands of business customers. Here, CEO Robert Sanchez discusses the corporate vision–and the desire to see around the next corner–that for decades has propelled Ryder to innovate and grow.

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So many companies fail to adapt to changing times. Ryder, meanwhile, started more than 80 years ago with one man, Jim Ryder, and a single truck, and has thrived ever since. How has Ryder managed to remain a leader for so long?

By staying close to our customers, listening to what they have to say, and empowering our people to solve their problems. I will tell you, there have been times in our company’s long history when we’ve gotten comfortable with our products and services, but we know that our customers’ problems change, and if you’re providing the same static set of solutions, you’re not going to be as responsive to new challenges.

Let me give you an example. Back in the ‘70s, fuel prices skyrocketed, and customers were asking, “How do I save money on fuel?” Ryder headed up an effort to design and manufacture an aerodynamic commercial truck. So even back then, Ryder was finding ways to creatively–and proactively–respond to what was happening with our customers.

Our move into logistics actually grew out of our effort to support one of the big auto manufacturers as they were developing their own dedicated transportation network for delivery of parts into auto-assembly plants. We started to provide solutions for that effort, and opened up a whole new business for our company.

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What are some examples of innovative practices that Ryder is pursuing right now?

Our fleet-management business, to name one. Trucks have been around forever, it seems, but over the past decade, the EPA has mandated clean-air standards that have required engine manufacturers to really up their game: They’ve had to redesign engines, add more sophistication, more parts, more complexity. Those vehicles also cost more money, they require a lot more maintenance, they’re harder to keep running–and that’s what we’re good at. So the likelihood that companies will outsource all of that work to us has really grown over the last decade. And this year, we’re introducing an on-demand maintenance service that opens up our national network of service facilities to large fleets that don’t have that capability, so they can get that support when and where they need it.

We’re also one of the largest commercial natural gas truck fleets in the nation. This has great long-term potential, not only for greener trucking solutions, but it saves our customers money on fuel. And finally, we’re providing more data to our customers. We’ve developed an algorithm, of sorts, that helps customers optimize shipping decisions. So many companies struggle with the question of whether they should use their own truck fleet for certain shipments, or would it be more economical and efficient to use trucks from a third party. We help thousands of companies make the right decision on that call, every day.

How does a company of Ryder’s size remain nimble and responsive in a marketplace where agility is often undervalued?

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We hire the right people–employees who share our core values. Then we give them the training and the tools they need to perform their jobs. And crucially, our employees serve our customers locally. We have 30,000 employees, but the typical location has 15 to 20 employees. We train our people right, and then empower them to take care of specific customer needs in their area.

Looking a few years down the road, what’s the single biggest challenge Ryder will face?

I think that our biggest challenge is our biggest opportunity–namely, that when you look at truck leasing and rentals, or the logistics business in general, less than 10% of those markets are outsourced to companies like Ryder. So the challenge becomes, how do I convince that 90%, or even a good portion of that 90%, to outsource to Ryder?

The good news is that we have macro-trends that are in our favor. The complexity around new truck technology is one such trend. The shortage of professional drivers and trained maintenance technicians is another. These and other factors are making it very difficult for do-it-yourselfers to keep performing these functions on their own. And that allows Ryder to come in and really explain our logistics and fleet-management services, which gives us a tremendous opportunity to grow the business for a long, long time to come.

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With all the changes that Ryder has undergone through the years, can you point to a core, sustaining principle that the company has adhered to since the very beginning?

If you go back to the earliest days, when Jim Ryder first founded the company–one guy in Miami with one Model A truck, in the midst of the Depression–and you look at all the different phases we’ve been through, the one constant is that we’re in the problem-solving business. Jim Ryder didn’t have a college degree when he started out; he was a recent high school grad, and despite the fact that he didn’t have some of the qualifications that we take for granted in a business leader today, he was a problem solver by nature. His mantra was continuous improvement: “How do I make the process better?” and the concept of how to utilize trucks and other assets more efficiently–those are big, big issues for us. We want to keep the thousands of trucks in our fleet on the road, keep them moving. When Jim bought his first truck, he realized pretty quickly that the truck only makes money when it’s running. Sitting around, it doesn’t make money. He hired a friend of his from high school, and they were able to keep the truck running 22 hours a day. While Jim was sleeping, his buddy was working.

The other thing Jim Ryder focused on was on-time delivery. Then, as now, making sure a product is at the right place, at the right time, is critical for any business. So a core principle has always been to be on time with deliveries. Jim Ryder used to wear two watches, one on his right wrist, one on his left, in order to stress to customers that he was always, always going to be on time.

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Robert E. Sanchez is Chairman and Chief Executive Officer of Ryder System, Inc.