Ryder System is dramatically growing its dedicated transportation services operations with the acquisition of Cardinal Logistics.
The investment firm of H.I.G. Capital was the seller in the deal. A price was not disclosed and Ryder said it would not answer further questions about the transaction, which has closed. However, it did say the deal would be discussed on the company’s earnings call on Feb. 14.
In the third quarter of 2023, Dedicated Transportation Solutions (DTS) at Ryder (NYSE: R) had total revenue of $448 million, down from $455 million a year earlier. It reported a fleet of 11,100 trucks. By comparison, the Transport Topics list of the Top 100 For Hire carriers has Cardinal Logistics with 2022 revenue of about $1.1 billion.
Although Cardinal’s revenue dwarfs the Ryder DTS revenue, it wasn’t immediately clear that all of Cardinal’s business and assets were going to be placed in DTS. In its prepared statement, Ryder said it would “fully integrate Cardinal operations, facilities and equipment into its dedicated transportation, fleet management and supply chain businesses.”
Those three divisions make up all of Ryder, with fleet management — the traditional leasing business — accounting for 47.5% of revenue in the third quarter, coming in at $1.5 billion in revenue. That percentage has been dropping, and that is part of Ryder’s plans.
Supply Chain Solutions, a provider of logistics services, had revenue of $1.2 billion, for 38.2% of total revenue in the third quarter. DTS, at $448 million, was 14.3% of revenue.
But even though the news release referred to Cardinal activities impacting all three segments of Ryder, the company statement said “the Cardinal acquisition will further advance Ryder’s strategy to accelerate profitable growth in its dedicated business.”
The statement also said the acquisition will be accretive to Ryder’s earnings by 2025 “after achieving synergies and completing integration efforts.”
In its 10-K filing last year, Ryder said: “Through our DTS business, we combine equipment, maintenance, professional drivers, administrative services and additional services, including routing and scheduling, fleet sizing, safety, regulatory compliance, risk management, and technology and communication systems support to provide customers with a dedicated transportation solution that is designed to increase their competitive position, improve risk management and integrate their transportation needs with their overall supply chain.”
DTS had 209 customer accounts at the end of 2022, according to the filing.
The 10-K report also said most of the DTS activities are short-haul, so its drivers are home each night. It also said DTS assets utilize the maintenance facilities of Ryder’s Fleet Management Solutions sector. But it also said DTS can work in conjunction with SCS, possibly explaining the reference in the release about the Cardinal Logistics acquisition impacting all three segments of Ryder.
Cardinal was founded by Tom Hostetler and Vin McLoughlin in 1997. Hostetler is CEO; McLoughlin is chairman. Both started their logistics career at Ryder in the 1980s and early 1990s. The statement described Cardinal’s activities as primarily being focused on “consumer packaged goods, omnichannel, grocery, building products, automotive, and industrial verticals.”
“We chose Ryder to continue our legacy because of the company culture,” Hostetler said in the statement. “We experienced firsthand Ryder’s people-first, customer-centric culture, and that had an impact on us as we built our own company.”
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