Ryder System Inc. is running full throttle into the fast-growing field of automotive logistics, where trucking, warehousing and just-in-time parts distribution are linked in a web of computer technology.
To tighten its focus on logistics, Ryder last week announced the sale of its car-hauling division, which was the market leader.
The Miami-based company is selling Ryder Automotive Carrier Services Inc. to Allied Holdings Inc. of Decatur, Ga., for $114.5 million in cash. If approved, the Ryder acquisition would make Allied the largest vehicle-hauling company in North America with a projected $1 billion in revenue and, by the company's estimate, about 50 percent of the market.
Ryder will focus on its Dedicated Logistics division. The parts delivery and inventory management unit has been growing at 20 to 30 percent in recent years. The logistics division provides a better return on investment and is growing faster than the car-hauling business, Ryder said.
Automakers are turning to logistics management companies to manage trucking, inventory and even in-plant parts distribution as a single process, said Miles Raper, vice president and general manager of Ryder's Dedicated Logistics automotive division in Ann Arbor, Mich. That provides an opportunity to take costs out of the entire distribution chain, he said.
'If a trucking company can cross the border and go into the logistics world, then substantial costs drop out the bottom,' Raper said.
Ryder has been awarded several logistics contracts with North American automakers. Its first was with Toyota in 1987. Others followed from Saturn Corp., Chrysler Corp. and General Motors. Raper said the automotive division projects 1997 revenue of $300 million.
In buying the Ryder car-hauling business, Allied hopes to create a more efficient system and free up some of its estimated 5,400 rigs for hauling more vehicles in high demand, such as sport-utilities.
'It makes a lot of sense to put the two companies together and eliminate the redundancies,' said A. Mitchell Poole Jr., Allied's president.
Allied is also expanding into the business of hauling cars for used-car superstores and auto auctions. And, in April, it acquired a company that specializes in containerized shipment of assembled and kit vehicles to markets around the globe.
The Ryder acquisition is expected to be completed by year end, pending approval of federal antitrust officials and the signing of a definitive agreement by Ryder and Allied.
If the deal is closed, Allied's largest customers will be GM and Ford Motor Co. With the Ryder business, Allied will also extend its reach from Canada and the eastern United States into the western states.