Ryder System, Inc. (R) Earnings Call Transcript & Summary

Welcome back, everyone. This is Justin Long with Stephens. We're excited to have Ryder joining us in Nashville again this year. To my left is Robert Sanchez, CEO, representing the company. This will be a fireside chat discussion, like the other presentations today. I'll start with a few questions and then open it up to the audience. So if you have any questions, be thinking of them now.

But Robert, thanks for being here. And maybe to get things started, there's a lot of [indiscernible]. If I just reflect back on Ryder, historically, EPS at the peak was $5, $6. Now you're talking about this core EPS number of $9.50. Can you just bridge us to where we were and where we are today from a core EPS perspective, what's driven that improvement in the business?

Sure. Yes. Look, we come a long way from the days that we were at $5.50 or close to $6 and now at $9.50. And I'll tell you a few things. One is clearly maintenance cost. We had an initiative to improve maintenance costs by $100 million that we started 3 years ago, and we're now going to achieve that this year, $100 million of lower annual maintenance cost in the business. We have -- we had an initiative to really improve our lease pricing and improve our spreads. We're about halfway through -- a little more than halfway through now with that exercise, and that's a $125 million improvement over a 6-year period, got about half -- a little over half of that already in. I would tell you also on the -- on how we manage the business, and how we account for residuals. We lowered our residual value assumptions, not just from an accounting standpoint, from a lease pricing standpoint, starting in 2019. So the amount of money that we're getting on leases of our trucks, so the amount we're getting upfront from our companies that lease our vehicles is higher. And that's really being brought through down to the bottom line for the company. So all those together are really helping to improve the core earnings of the business, along with also getting our Supply Chain and Dedicated business growing at good returns. And we got both of those segments back to our target margins of high-single digits earnings before tax as a percent of operating revenue. So those are becoming a bigger part of our earnings story, too -- or have become a bigger part of our earnings story from where we were back at the $5.50 and now at the $9.50. And I'd just point out $9.50 is not a peak, necessarily a peak earnings, it's a core earnings number. So the idea is that, that is made up primarily of our contractual businesses, which is our Truck Leasing business, our Dedicated transportation and our Supply Chain. 85% of our revenue is contractual. So what we've tried to do now is take the noise out from Rental and Used Trucks and say how much of our earnings are really from these core businesses? And those core businesses should continue to grow through the cycle.

And you've been pretty open about the transactional business coming down at some point, and I think that's very reasonable. From a contractual standpoint, how much growth do you have locked in as we look ahead to 2023?

Well, on the Lease side of the business, we have almost sold out all of our allocation of trucks for next year. So everything the OEMs are giving us right now, we've got leases signed for most of it, and then the rest we plan on buying for Rental. So we feel pretty good about where -- what our revenue is going to be and what our sales are going to be for next year. So if we get into January, February, we're going to start selling into 2024. So we've got, I would say, almost all of it locked up. On the Supply Chain, -- on the Supply Chain side, most -- our sales cycle is pretty long. It's typically 3 months to 6 months to get some of those after you sign them to get them implemented. So I'd say, you probably got about half of that business already signed and sold as we get into the end of the year. So again, feel pretty good about where we are with that contractual business, too.

Okay. And dedicated? What about that...

Dedicated, you're probably looking at more like a 90- to 120-day lead time. But we're going to have record sales across Supply Chain and Dedicated. So our -- just to put it in perspective, our Supply Chain business is going to grow 50% this year, 5-0. Half of that is acquisitions and half is organic. So organic low- to mid-20s percent. Our Dedicated business is going to grow 15%, 16% this year, so mid-teens. As we go to next year, we're saying target is high single digit for Dedicated. We're probably going to be a little bit above that as we go into next year, we would expect. And I expect Supply Chain to continue to grow in that double-digit level, probably not as high as it is today in that 20-plus percent, but down in the teens.

And you've said on the Lease side, you expect to be at the high end of the targeted range on growth as well, correct?

Right. So this year, our Lease fleet is going to grow by the -- at the end of the year, 2,000 units. We've said our target is 2,000 to 4,000. So there's 2,000 units that are rolling over into next year because of the delays in the OEMs. So as you think about next year, we're probably going to be on the high end of that range, maybe a little bit above the 4,000. But I think, at a good clip, good returns on the business that we're signing, it's still keeping a balance between growth and the free cash flow impact. So we talked about free cash flow next year being breakeven. And we had years when we were growing 8,000 to 10,000 units that we were negative $800 million and $1 billion, and there was a lot of pause over that level of negative free cash flow. So we're trying to find that goldilocks balance of we want growth, but we want to make sure that we also keep that free cash flow in a reasonable range.

Okay. And on the transactional side of the business, is your assumption that we get back to the normalized level in 2023? Or do you think it takes more time than that to normalize?

I think we're going to get close to -- we should -- I would expect we get close to normalized next year. We were expecting used truck prices to continue to come down to more normalized levels over 2023. That all depends on how quickly the OEMs get new trucks in. Rental will come down at some point. We have not seen that yet. Our demand for rental trucks is still very high. But as new truck production really ramps up over time, we expect Rental to slow down some and get back to that -- it's in the low 80% utilization, expected to be running more in the high 70s, and we would expect to see that as we go into next year.

Okay. Great. I'll pause there, open it up if there's any questions in the room.

On the projected growth in Dedicated next year. Is that revenue or trucks?

That's revenue.

Yes, you'll include some of that [indiscernible] ?

Correct.

And just curious, at this point, how much do you see in the pipeline or how much of that or new truck are you expecting through 2023 [indiscernible] in process?

Well, in terms of sales that we have locked up, I mean, like I said, we're typically maybe 120 days out. So we'll have signed through April, May, maybe. And in terms of trucks, one of the benefits of having the business the way we have them is that we are able to read the -- if we need trucks for a new account, we're able to take trucks out of the Rental fleet, coming off Lease, and we put them to work in Dedicated. So we have an opportunity to redeploy equipment if we need to on it. But the shortage of truck drivers, the shortage of trucks is good for Dedicated because private fleets are really looking for companies that can help them with that. And we don't see -- we see -- and maybe the -- we have seen the turnover for drivers begin to subside some. We've seen our openings come down some from these peak levels, which is good for us. But the expectation is that, that may subside into next year, but then pick back up in 2024 as an ongoing challenge, especially for private fleets.

Any other questions from the audience?

[indiscernible]

We have. We started to see that in the second quarter. We started to see -- used tractor pricing peaked in the first quarter and started coming down. But I mean, it's at astronomical levels. We're selling trucks for more than we've ever sold them. So we're seeing those come down. We expect those to continue to come down and really through next year, probably normalize next year, maybe even get down and maybe trough sometime in the fourth quarter of next year is sort of what we're thinking right now. And that's just as supply and demand start to moderate again. Now if there's any kind of disruption to semiconductors again or that could have it all go back up if we see anything there. But when economy starts to slow, supply starts coming into the market, I'd expect used truck prices to continue to slowly come down.

And when you say trough in the fourth quarter, is that at normalized levels or below normalized levels?

Yes, who knows. It could be at normalized levels, it could be a trough. The point is that the way we have set the residuals for our fleet even at a trough level, you're still at zero gains. You're not at a point where you're having to take additional depreciation and accelerate like we had to go through in the past.

Got it. Given the growth you anticipate in your contractual businesses and you just talked about earlier, can you talk about OE availability and truck availability to support that growth as we move into 2023?

Yes, we need more of it. We need more availability. We're, like everybody else, is knocking on the door for the OEMs trying to get more trucks. They're constrained right now with what they're willing to commit to. We are using up every truck that we're being given. And we have -- like I said, we've got leases signed for almost all of them at this point. So we're hoping that as the year progresses, there's going to be some firming up of production, they'll be able to release some more. But right now, the demand looks really still overwhelming the supply.

Okay. Any other questions from the audience?

And the other thing I would add is that for those -- when I say for our Lease, those are leases that we have a customer signature already for us. So they're already signed for. We're just waiting for the truck to come in.

And maybe you could take us through the life cycle of a truck. Do you buy a truck from a OE, how do you allocate that? Does it go to a Lease first and then a Rental? And has your philosophy on that changed at all in recent years?

Yes. For a lease, we -- we don't buy a truck and we have a signed lease. So we sit down with a customer. We agree on what they need. We help them configure the vehicle. We agree on our lease price. Customer signs the lease, then we order the truck. So goes OEM producers -- now we have slot dates that are allocated to Ryder, but they're not really firm until we've got that lease signed. So we order the truck. Truck comes in, gets put in service. We pay for the truck and the customer runs it. It's coming into our shop maybe, let's call it, 3, 4 times a year, unless they're coming in for fueling, which if they come in for fueling, they're coming in a couple of times a week. And then that will run for 6 years, typically. Comes back, in some cases, still has life left. We'll put it into a dedicated operation. We'll put it into a Supply Chain operation. It may even go into Rental sometimes. And then after it's gotten to what we feel is the full life, then it's sold. If the vehicle is bought into Rental, goes into the Rental fleet, starts running at Rental. We get into a slowdown in Rental, we start leasing out of the Rental fleet. So rather than buying new equipment for Lease, we're leasing out of the Rental. That's how we get our Rental fleet down pretty quickly. Typically, we adjust the size of our Rental fleet in 60 to 90 days to match any changes in demand. And then that will also run for what we view as the useful life. Typically, for a Ryder vehicle, useful life can be 700,000 to 800,000 miles on a Class 8 tractor. And at that point, it gets to the point where you're going to have -- no matter while you maintain, you're going to have more breakdowns. So you're either going to put that on a local route or you're going to sell it in the secondary market.

Got it. And how are you managing your assets today to prepare for a potential slowdown in Rental next year?

Right. So we are -- we've been thoughtful about the number of new trucks we're bringing into Rental. There is replacement that we want to continue to do. We are focusing more on the truck side versus the tractor side in terms of where we're buying because the truck market seems to -- over the last couple of cycles, has held up a lot better than the tractor. I think it's that e-commerce secular trend that's really helping that market. So we want to get bigger into the truck side. On the tractor side, we want to have as much as we need to support our Lease and then just make sure that those vehicles are available when they're needed. So we're being -- we are moderate. We're being mindful about what comes in. And then we're also ready to turn on our Rental-to-Lease program when it's needed, right? So we start to see a slowdown in demand. All we do is we take our salespeople and redirect them from leasing new equipment to leasing out of the Rental fleet. And that's how we get our adjustment in size pretty quickly. And thinking -- I mean right now, they're fighting for every truck they can. So if I opened up the Rental fleet to our salespeople, immediately, they'd be on it because everybody is looking for trucks. So...

Right. Where do you see that truck number as a percentage of the total fleet -- Rental fleet, where do you see that trending? You said you wanted it to be bigger? Where can that go?

Truck as a percent of the total Rental fleet?

Correct.

Yes. We want to -- over time, we'd like to see that move and become a bigger part, be more than 50% of the total fleet. It's going to be over time, and we're going to continue to -- you can't flood the market, but we're going to continue to find ways to grow into that good return business -- a great return business, I would say, over the cycle and less volatile than the tractor side.

Okay. Just raise your hand if you got a question. If not, I'll keep going. But when you think about a normalization in Rental, you've talked about utilization metrics to kind of model that. But from a pricing perspective, how do you think we normalize versus where we are today?

Well, it's really funny because Rental -- I've been with the company 30 years and the first several cycles of Rental I went through, we tended to drop price and -- into a downturn and then it would take us years to get pricing back. It was kind of a market dynamic. That changed over the last several cycles where, I think, pricing has generally held pretty well even in a slow market, and it's really the utilization that goes down. And we're expecting going forward that, that will continue. If not, obviously, we'd be adjusting like everybody else, but that's sort of been the trend the last couple of cycles.

Okay. Got it. Maybe shifting back to Dedicated. Could you just talk about how the pipeline has trended over the course of the year for Dedicated? It feels like the value proposition is pretty strong for private fleet conversions, but the freight market has softened some. So what are you seeing?

Yes. We've seen it steady through most of the year. I wouldn't say accelerating, but steady. The type of Dedicated we do is not the dock-door to dock-door type dedicated, distribution center to distribution. It's primarily more specialized equipment or specialized type delivery where the driver has to do additional work rather than backing up into a dock door. We're finding that type of Dedicated. There's still a good amount of demand for it because these companies are having trouble hiring drivers, finding equipment, how do they optimize those moves, and we're continuing to win certainly our fair share of that.

Okay. And how much of your growth in Dedicated would you say is coming from private fleet conversions versus just organic -- rather organic winning business?

I'm not so it's a number that we've tracked, but I'd say it's got to be at least 50% of it is coming from private fleet conversions. Yes.

Okay.

When I say that -- well, actually, maybe the way for me to answer that is, over 50% of our Dedicated sales comes from our Lease...

Up sell?

Up sell. So all of those technically are private fleets because they have their own drivers. They lease from us, but they have their own drivers. So that funnel has continued. We continue to see more than 50% of the sales coming from customers that were leasing trucks and now need help with the truck and the driver.

And can you remind me of the returns you typically target for Dedicated? I think maybe in the past, you've given a return versus cost of capital, maybe what that spread is? And I'm just curious if the return objectives for that business have changed at all?

No, no, they haven't. As a matter of fact, the challenge we had in Dedicated was that, with the spike up in driver wages in 2020, 2021, all the contracts weren't set up to be able to pass that through to the customer. And it took us a while to go back and really renegotiate the contracts and get the pricing through. So we've been able to do that. We saw the margins come back to high-single-digit as a percent of operating revenue. That's really the target we have for that business. And we also renegotiated the contracts in a way where, going forward, we expect that to be a lot more automatic, if you will, or easier to push through as opposed to having to go back and really renegotiate mid-contract the agreements.

Okay.

And by the way, we had to go back to almost every customer, and in that whole process, we lost two. The rest of the portfolio realized, okay, we understand it's not Ryder, it's the market. Wages are going up. And whether I go with Ryder or Brand X, I'm going to have to pay the market wages.

That makes me think about the lease price initiatives that you've implemented. Any thoughts around customers you've lost through that process?

Yes. I think when we first embarked on that back in '19, where we first started really lowering residuals, raising prices, we did lose some market share. We lost some market share through the first couple of years. As we look at our win-loss now, I think there's much more of a balance now. I think the market has kind of come to where our pricing is. And customers still see the value in leasing. They still see the benefits of buying power Ryder has, the maintenance network, the ability to keep their trucks up and running and then being able to have Ryder handle the resale of the vehicle at the end. There's a lot of value in that, and we're seeing customers are willing to pay for it.

Okay.

Customer you just mentioned in the last [indiscernible].

Yes, it's interesting. I think that two of them went back in-house. They decided they would try it on their own. So we're hoping at some point, they decided to come back to us. But right now, they were going back in-house.

[indiscernible] I understand supply is really tight in leasing business. Can they cancel if customers [indiscernible]?

No. No, the leases are signed and they're ready to go. Typically, these customers, too. It's not like they -- let's say that we're going to add a vehicle for growth, and they realize, well, I don't need that. Well, there's always a vehicle or two they have to replace. So they find a way to blend it into the fleet.

Maybe I can get your thoughts on the Supply Chain disruptions. You have exposure to a lot of different end markets and industries and in your business. How would you say those challenges are progressing on a sequential basis right now? Does it feel like things are getting better, worse, about the same?

No, I'd say a lot better, a lot better than they were a year ago and continue to improve. We're in 4 segments. So we're in the automotive business. So we do a lot of inbound automotive logistics for the big OEMs, and that's improved dramatically from where it was a year ago with all the disruption that was going on then. And I think that will continue. Obviously, there's also a shift from ICE vehicles to electric. So some of those new plants are ramping up and getting those plants ramped up now is an important part of what's happening there. But I think auto still has a lot of -- it still has a lot of runway. I think auto is going to be stronger for longer, definitely because of the inventory that still needs to be built up at dealers that don't have cars and the demand that's still out there. On the industrial side, we're still seeing pretty good strength. The ports have gotten unclogged, if you will, on the West Coast. So we're seeing a pretty good flow of product there. And a lot better than it was a year ago, and I would say better even sequentially. CPG has -- the CPG business, their supply chain issues were more around driver and truck availability, truckload type and I think that's behind us. You don't have that same constraint that you had back then. And then the high tech, health care, really, again, not as big of an issue either. So definitely a lot better than it was. And I would say, in many cases, almost back to normal.

And as you think about those different end markets, what's your view on the demand environment as we go into next year just based on the feedback you're hearing from your customers? What's the economic scenario that you're kind of budgeting to and thinking about for 2023?

Yes. Everybody is bracing for the recession, right? Everybody is just preparing for, there has to be a slowdown. If you keep raising interest rates, yes, there will be a recession at some point. So I think that's the general sentiment is, cautious going into next year, no one's making big moves, I think, as we go into next year because everybody is planning for a slowdown. We're not seeing -- we're seeing it on the used truck side, definitely already. We're not seeing it on the Rental side yet. We're going into it probably the same way, cautious, but also looking for where those opportunities are. We have a -- we have a book of signed leases as we go into next year that we know we're going to be in servicing and bringing in. We've got trucks to sell on the used truck side. And then on the logistics side, we expect still a lot of demand because as the complexities around the supply chain and even some of the near shoring that you've been hearing as companies start doing near shoring and on-shoring, we're a North American logistics company, so that's what we do. That's what we're good at, and we're getting, certainly, I think, more than our fair share of that type of business.

Okay. Great. Any questions from the audience, just doing a check in. Maybe with the Supply Chain business, what are you seeing in terms of inventory levels? I guess building on that question, there's a lot of discussion about some companies having too much inventory. What could the destock look like? What are you hearing from your customers?

Yes. I guess the place where I see it most because a lot of the boxes that we run are dedicated to a customer so that inventory, a lot of times, it's more proprietary for them. But where we see across our multi-client e-commerce type businesses, we did see inventory start to build up in some of those locations over the last quarter. And we are seeing a little bit of a slowdown in some of the flow-through of product versus what we'd seen before. But we have a lot of new customers also lined up in that business. The network of locations that we had when we bought Whiplash is -- are busting at the seams. I mean we've had a lot of -- we've actually been opening up new locations for them. But we are seeing -- as we've gone over the last few months, we have seen a little bit of a slowdown in the throughput, if you will, of the e-commerce business.

Okay.

And the way those are priced are price on a fixed and variable basis. So we feel, from a margin standpoint, we're well hedged.

And you mentioned Whiplash. You've built out your final Mile business pretty significantly. Can you just give people a rough sense for where that business sits today from a revenue perspective and how you think about the growth and margin opportunity in that business longer term?

Yes. Well, there's two pieces, right? We have the Ryder Last Mile, which is the big and bulky final mile delivery. Think about furniture, fitness equipment, appliance that type of stuff, where that was the MXD business that we bought in 2018. And then the Whiplash business is the e-commerce fulfillment business, which has warehouses of, I think about apparel and the e-commerce company that wants to go to their end consumer. They don't want to go through e-retailer. They want to go direct, coming to a company like Ryder, and we'll do that fulfillment for them. Those are two businesses that we were not in 5 years ago. And those businesses, as we go to next year, we're probably looking to combine about $1 billion of revenue between the two of them with really good growth trajectories for both. So we're excited about that part of the business, and that becomes a bigger part of our Supply Chain business. Returns are good in that business. And again, we're -- our focus is now to continue to expand and take advantage of what is a secular growth trend in that business.

And is that growth anticipated to be organic growth? Or do you think we'll see more acquisitions?

You see what we -- I think we've got our two anchor acquisitions. We did a small tuck-in .com. It was a facility in New Jersey. So you could see us do some type of tuck-in like that, but it will be primarily -- the growth we're talking about is primarily organic.

Okay. Great. One of the things that came up prepandemic was the idea that you could potentially look at strategic alternatives for one or more of your segments. Does it make sense for all three segments to be together? And then I feel like the discussions on that kind of died down with the pandemic, and a lot has happened. Where do you stand on that? I mean there's -- I see synergies across these businesses, but I could also understand the perspective that maybe you're undervaluing some of these businesses within the portfolio. Just -- I'm curious how you think about it?

Look, our focus is to try to get the full valuation of the businesses as a whole, but we're open to -- we've always looked at what the different alternatives are. The synergy of this businesses, as I mentioned, between FMS, our leasing business and Dedicated is the upsell. We've got 15,000 Lease customers, and every year, we're upselling a number of those into a dedicated operation that creates a funnel of new business for Dedicated. Then there are certainly synergies between our Dedicated business and our Supply Chain business because 1/3 of the Supply Chain business is more of a truck transportation, Dedicated type business. So we want to keep those and take advantage of where -- as long as we can. If we do not see that over time, obviously, we'll continue to look at other ways of unlocking that value. But I do believe that in a lot of ways, our business is still -- we're in a little bit of a show-me period here, right? We went through a tough 2019. I think investors got spooked when we had to make the residual adjustments that we did. We made some big changes to the business model, lowering our residual assumptions, increasing the lease rates, growing the higher return businesses, got out of the lower-return business in the U.K. And we've really done a lot of things, I think, to reposition the business. You talked about the $9.50 versus the $5.50. I think there's still a lot of -- as we talk to investors, a lot of people that are waiting to say, all right, let me see how this works when you go through the next used truck downturn. So we're excited about. We're almost embracing this downturn. We want it to come because we want to prove that the model really does hold up well. And I think when that happens, we're expecting to get -- there'll be some revaluation of the business, which will include the three together and get what this company is worth.

Okay. Great. I may have asked about this actually on the conference call, but interest rates have moved much higher. I think the answer I got was related more to the debt structure of the business and the sensitivity. But how do you think about a higher interest rate environment and the puts and takes for Ryder?

Yes. Well, our -- the majority of our capital goes to -- of our debt capital goes to trucks in our leasing business, right? So that's where the -- I'd say, the lion's share of our capital investment goes. So what we try to do is we try to match fund, the duration of our lease with the duration of our debt. So as interest rates move up, I'm replacing trucks and the lease that was -- with a lower interest rate goes away and the new lease that gets renewed was with the higher interest rate because we adjust our pricing model. We're doing it monthly. Now we're doing it more -- every couple of weeks, depending on what's going on with the lease rates. So we feel that we're pretty well hedged on that part of it, but you do have a little bit of exposure is -- a small percent, what's our variable debt? We're about 18%, 20%, I think, is -- of our debt is variable. So as interest rates go up, you're going to see some increase in interest expense. It equates to about $10 million for every 100 basis points in annual interest expense. So nothing that we can't handle. I think it's in -- we're in pretty good shape there.

Okay. And if we're in a recession next year, what's the opportunity to cut costs and flex down the cost structure in that environment because I know you have to balance that against strategic investments that you're making for growth?

So we implemented back in 2017 a zero-based budgeting process at Ryder. So every year, we go through a start from zero and let's work our way up. And we typically have -- by the time we're done doing that work, we've got room for $20 million to $40 million of strategic investments. And that's how we've tried to fund it. So if we were to go into a recession, we would take that zero-based budgeting. We probably pare back on some of the strategic investments, take a finer pencil to it and bring that down.

Okay. And how do you think about the state of the balance sheet going into a potential recession as well? There could be more capital deployment opportunities, whether it's doing acquisitions or buying your own stock, like targeted leverage is your below target leverage today. So like how do you think through all that?

We feel really good about where our balance sheet is now. We're at 210% in the third quarter debt to equity, and our target is 250% to 300%. So we have plenty of room to do acquisitions. We have plenty of room to do share buyback. As a matter of fact, we're executing on the -- we did the $300 million accelerated share repurchase program that we announced in February and completed that. We are currently executing on the -- we've executed on the anti-dilutive repurchase program and are currently executing on the discretionary 2 million share program as we speak. So our goal is to deploy that capital in acquisitions as we did with the e-commerce last year, Whiplash and also Midwest Warehouse and Distribution, where we find the right fit and otherwise make sure that we're keeping our balance sheet close to where it needs to be by doing share buybacks and returning money to the shareholders.

Okay. Just checking in for questions again. All right. I'll keep going. Thinking about the competitive dynamics, have you seen any major changes postpandemic across the different businesses, whether it be Lease or Rental or Supply Chain, Dedicated?

No, I think all of us have been dealing with inflation for the first time -- many of us in the first time in our careers, right? We never -- we didn't know what inflation really was. So it's kind of changed the dynamics of passing through -- accepting cost increases and passing through cost increases. And I think everybody has gotten used to that -- not used to that, has learned how to do that, right, whether it's Ryder, or our competitors, our suppliers, our customers, everybody has kind of had to adjust to that since the pandemic. And I think we're getting -- as inflation starts to level off, we may go back to the more normalized environment. But the costs that have gone through, I don't see those going backwards necessarily. I think those costs are now in the system, and we're all going to -- we've all -- are finding our way on how that affects our business.

Okay. I wanted to shift to technology. I feel like Ryder is at the forefront of exploring a lot of different technological movements within transportation, within the truck world. What are some of the more interesting trends that you're seeing in the market today? And I know you're invested in some of these, but I just wanted to get your latest thoughts?

Yes. We -- well, I'll tell you, I wouldn't say we -- I learned a lesson in the last couple of years as we deployed RyderShare to our Supply Chain customers. So RyderShare is just primarily a visibility and collaboration tool for companies that outsource their supply chain to Ryder. So they can see where their order is, where their product is anywhere in the supply chain that Ryder is managing. And we -- we spent a significant amount of money and time and effort working on getting that out there. And it quickly became an important differentiator in our business. We're really helping to drive more sales to helping to get customers on board because that technology was -- it wasn't -- it was something different that Ryder could bring to the table that the competition didn't have so they can catch up in 6 months or a year, but it gives you that edge. So we realized, look, if we want to really continue to be a world-class provider in logistics, we want to have the technology that differentiates us. So you heard us, we purchased a company out of Silicon Valley, Baton, which was a truckload optimization company. They were trying to optimize the deliveries for carriers to customers, and we got to know them through RyderVentures, our venture capital fund. And as we spent more time with them, we realized we really didn't have as much use for that truckload optimization software since we weren't in the truckload business, but we really thought the optimization software was pretty cool, and we could use it right. So we ended up buying the company so we can then bring these folks on, and they can help us build new products and new services and new optimizations for our customers. So now it's not just relying on third parties for some of the software that we can stay ahead of the curve on the technology for supply chain. So we feel really good about where we are there. We are working with autonomous truck companies. You hear us partnering with them to figure out how Ryder can be a player in that. We could be the maintenance provider. Our hubs could be the hubs for them. We could be an owner of an autonomous truck network. We could be an operator. So there's a lot of opportunities there, and we've got our -- we've really got our partnerships out there with most of the technology companies there. Electric trucks, we've got a whole group just focused on where that's going. I think the light duty is what we're seeing electrification happens sooner. We're pretty excited about the opportunity of bringing some light-duty delivery vans, electric delivery vans into our fleet as we go into next year. Medium and heavy duty, a little further out, I think, we're not seeing yet the value prop that you could buy one and have it make sense. It remain to be seen. You've got some players out there that may have something for next year. But otherwise, I think the traditional OEMs are probably further out. But we're looking there to be a partner for our customers who may transition to electric over time. And that transition, I think, is going to take 1.5 decades, 2 decades maybe as you get out of diesel maybe at some point and you go to electric and some of these to help companies do that. I think we're very well positioned to be that player. So we're excited about that. We don't want to get too far ahead of it because you end up buying a bunch of vehicles that aren't ready for prime time yet. We're not ready to do that. So that's what we're doing on the [indiscernible]. As you know, we're working on COOP, our truck-sharing platform. We've rolled that out nationally now. It's still relatively small. And with the shortage of supply of trucks, it's been hard to get enough people to put surplus trucks on the platform, but we have had success with some customers that have bought trucks and put them on the platform as an investment, and that's working out for them. So we're looking to see that continue to expand, maybe become certainly a bigger part of the company over the next couple of years, but we feel good about where we are with that. We've got an initiative -- a new initiative called Torque, which is our mobile maintenance efforts. So electric, we think over time is going to be more of a mobile maintenance solution as opposed to bring it into the shop all the time. So we want to become a significant player in mobile maintenance. We've got a whole effort around building that out, some small acquisitions so far, but really making that a service that we can provide retail mobile maintenance for customers that need it. And then the other big piece is really continuing around e-commerce and continue to find ways to be a part of that.

And I now one of the things we've talked about in the past was just the capacity that you have in your maintenance network, and you've got a significant amount of facilities across the country. Where does that number sit today as we think about your ability to capitalize on some of these opportunities like doing maintenance for an autonomous network or even operating one?

Yes, we still have capacity at most of -- a lot of our facilities, in most of our facilities. I think if we did a vacancy rate, we're probably at 30% vacancy in terms of facilities, but it all depends on where and where it's needed, but that has not been a constraint as we've talked to these autonomous truck companies in terms of our ability to support them in their efforts to test this stuff and get it out to market.

Okay. Last call for questions. Anything?

Just on autonomous trucks. [indiscernible] you had this big shortage of drivers. [indiscernible] I mean is that going to be the solution going forward because you don't have -- maybe people who have the number of drivers [indiscernible] migrating more to an autonomous type vehicle?

Well, that's the concept, right? As if you can do that, the question is, how long is it going to take to get, not just the technology, but the regulatory environment ironed out, but there isn't another -- I mean, the only other solution is immigration. And that might be harder than actually building an autonomous truck because you can't get politicians to agree on how to get that done. So in the meantime, it's going to be the technology. It's going to be trying to get more people to enter the workforce to drive. But we have not had great success yet in being able to do that.

But companies trying to solve that problem by, I don't know, just building out more DCs in this country just because they're [indiscernible]?

I don't know. I mean, we haven't necessarily seen that. The good news is a lot of companies that were trying to solve it is to hand it over to us, right? I can't find a driver, let me go find Ryder or one of the competitors to go. We have 10,000 professional drivers that work for Ryder. We have a whole recruiting machinery around that and really leveraging that and our ability to attract and retain drivers.

00 [indiscernible] some companies, they obviously tend to lower their age requirements [indiscernible]?

Yes. Well, we'd like to where the laws would allow us. You still have regulations that keep the driving age at 21, and it makes it a lot tougher to recruit people into the driving profession and being able to keep them.

One question over here.

[indiscernible] battery costs, efficiencies or a combination of both?

It's a little bit of both, but it's primarily -- right now, it's a lot of it is the cost. The cost that's out there from the traditional OEMs, I'd say, the vehicles that they produce, the cost is still very difficult to justify putting into a fleet. We've had access to them, and we have a tough time finding customers that are willing to sign up for it even as a test. So the price needs to come down. And then you got to deal with the operational. We got to get the infrastructure in place and the operational challenges around that.

[indiscernible] As I understand let's say with a lot of vehicles you've got, [indiscernible], which means some road that's going to basically municipalities tearing up their roads and you're getting much push back when you think about things like that?

Not yet. Only we've gotten to that point yet, right? There's a lot to be ironed out. I think the passenger car is clearly going to be way ahead of commercial trucks. And they're going to -- I think they're going to work through a lot of the roadblocks. But eventually, yes, a lot of these things are real issues. There was a good article, I think in the Journal yesterday about all the challenges with electric and getting batteries, even getting the raw materials for the batteries and all that and the infrastructure. So there's a lot of roadblocks still to go through. We were early adopters in natural gas trucks back in 2012 and '13. At one point, we had 1,000 natural gas trucks in our fleet and it didn't pan out too well. Because ultimately, while when diesel was at $5, everybody was interested in it. Operationally, they were more clunky, but you're getting savings on the gas, but as soon as fuel prices came down, no one wanted them. And there's a lot of talk about that. The key there is the infrastructure and getting the infrastructure in place for it, but that could be a solution for some of the longer haul. But I think, again, it's going to be a process. It's going to take -- it always takes longer than you think. And so I think diesel is going to be around for a while, especially on the heavy-duty stuff, and that transition is going to take a significant amount of time.

All right. In the interest of time, I'm going to end it there. But, Robert, thanks again. Appreciate it.

Right. Thank you.