Glut of Class 8 Trucks Hurts Ryder’s Profits
The glut of Class 8 tractors is causing problems for truck leasing companies, including Ryder System Inc., (R) which remains profitable but is having to move nimbly.
When trucking companies are expanding and in need of extra equipment to fulfill pressing short-term obligations, their managers turn to leasing companies such as Ryder, Rollins (RLC) or Penske, said Rockel. “But when you’ve got too much capacity and not enough business, the first thing that goes is the rental equipment,” he added.
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The Miami-based firm told its shareholders Oct. 6, that it will take a pre-tax charge on its third quarter earnings in the range of $34 million to $37 million total, or 35 to 39 cents a share after taxes. The charge means the company is acknowledging its stable of heavy-duty tractors has plummeted in value.
Such a substantial surplus of tractors hits leasing companies particularly hard, according to analyst Douglas W. Rockel of ING Barings in New York.
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