Ryder Looking Forward to Green Expo - Analyst Blog

By Zacks Equity Research,

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Ryder System Inc. ( R ), the world's largest provider of integrated logistics and transportation solutions has announced that it will be represented by Vice President of Supply Management, Scott Perry in a panel at Alternative Clean Transportation (ACT) Expo. The panel meet is considered the largest alternative fuels and clean vehicle technologies conference in North America and will be held on May 17, in California.

Over the summit, the company will showcase its initiatives toward the deployment of alternative fuel vehicle fleets and clean vehicle technologies in North America.

In September last year, the company launched its "Flex-to-Green" lease offering to support sustainable transportation, or eco-friendly transportation for private fleet operators. This lease offering involves incorporation of fuel efficient vehicles, including liquid natural gas and hybrid vehicles into its fleets. The deal provides customers an opportunity to convert their conventional vehicles to new fuel-efficient ones as per their preference.

In consequence to the company's initiative, Ryder entered into its first "Flex-to-Green" lease agreement with Source Interlink, (an U.S. based publishing and logistic company) in January. Per the agreement, Ryder will provide Source Interlink with a flexible option to exchange diesel vehicles for natural gas-powered vehicles. However, the terms of the deal were not disclosed.

In 2010, Federal Corporate Average Fuel Economy (CAFE) set a fuel economy standard of 34.1 miles per gallon, which is to be implemented on automobiles manufactured through 2012 to 2016. As per industry insiders, it is estimated that the mandate will require investments of approximately $50 billion by automakers to upgrade their technology to meet the CAFE standards.

This indicates the growing importance of eco-friendly transportation. Several companies, especially those involved in transportation and logistic services, are increasingly realizing the benefits of fuel efficient vehicles.

If the Fed is right, automakers will spend $51.5 billion over the next five years in putting the standards into effect and the average price of a new car will rise by $985 by 2016. Savings, though, are expected to be even greater, with the average consumer netting an extra $3,000 from fuel savings over the life of the vehicle.

These  vehicles are not only designed to minimize the harmful impacts of heavy fuel consumption but will also aid in optimal utilization of resources through alternative fuel usage, ultimately leading to significant cost synergies for the companies.

Consequently, it is apparent that Ryder's Flex-to-Green lease offering is a significant step toward tapping a gradually growing market, arising from a compelling need for sustainable transportation. Further, this will also enhance the competitive position of the company against rivals like Con-Way Inc. ( CNW ).

Ryder has pioneered several such initiatives that promote the utility of alternative fuel vehicles. The SANBAG (San Bernardino Associated Governments) project is one such. Under this project, Ryder collaborated with Southern California Association of Governments Clean Cities Coalition, to provide 87 heavy-duty natural gas trucks to customers.

Under the SANBAG project, Ryder received a total of 202 natural gas vehicles, worth $38.7 million and marked the largest commercial natural gas truck project in North America.

In addition, the company also received three natural gas compliant maintenance shops in Rancho Dominguez, Orange, and Fontana, and two fueling stations through SANBAG.  

The company currently supplies alternative fuel vehicles in southern California and Arizona region, which is also home to Source Interlink's largest distribution center. As a result, Source Interlink will also benefit from an easy access to Ryder's fueling and maintenance centers, which was one of Source Interlink's key reasons to enter the deal.

One can expect that with the growing demand for fuel efficient transportation, Ryder will boost its infrastructural capabilities by expanding into new markets and thus promoting its Flex-to-Green lease initiative.

CON-WAY INC (CNW): Free Stock Analysis Report
RYDER SYS (R): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: CAFE , CNW , R

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