Truck Rental and Leasing Without Drivers

SIC 7513

Companies in this industry

Industry report:

This category covers establishments primarily engaged in short-term rental or extended-term leasing (with or without maintenance) of trucks, truck tractors, or semi-trailers without drivers. Establishments primarily engaged in finance leasing of trucks are classified in Finance, SIC 6159: Miscellaneous Business Credit Institutions; those renting trucks with drivers are classified in various trucking and courier service industries; and those primarily engaged in renting and leasing, except finance leasing, of industrial trucks are classified in SIC 7359: Equipment Rental and Leasing, Not Elsewhere Classified.

Industry Snapshot

The truck rental and leasing industry was healthy in the middle of the first decade of the 2000s before running into tough times at the end of the decade as the subprime crisis created a stagnant housing environment when a slow real estate market created a slow truck rental market. However, by the beginning of the 2010s, recovery appeared to be on the horizon. According to the U.S. Census Bureau, in 2010 there were 5,774 establishments in this industry employing a combined 208,363 people and generating revenues of $13.4 billion.

Background and Development

In the late 1980s, many companies with transportation needs began moving to full-service leasing, with the leasing firm assuming responsibility for all matters relating to the vehicle, including purchase, fuel, taxes, licenses, and hauling permits. Although drivers sometimes complained about the quality of maintenance with full-service leasing, surveys indicated that repair and maintenance operations at larger lease companies often were better managed and their mechanics better trained than with private fleet operations.

After expansive growth in the late 1980s and early 1990s, the truck rental market slowed in the mid-1990s, as U-Haul and Ryder competed for expansion of dealer locations and market share. Ryder sold its Ryder Consumer Truck Rental division in 1996, but the new owners (the Budget Group) retained the Ryder name and market identity. In 1999 U-Haul International led the industry with about 190,000 trucks for rent from over 15,000 dealerships. It reported U.S. rental revenues of over $1.5 billion and employed 14,400 workers. U-Haul's business consisted entirely of rentals to do-it-yourself movers. Ryder TRS, on the other hand, gained approximately 70 percent of its business from consumers, with the remainder from business rentals. It owned a fleet of 33,500 trucks at 3,500 dealer locations and reported 1999 rental revenues of $550 million.

Among important trends affecting the industry in the 1990s were changing tax laws, stricter environmental regulations, and efforts by large corporations to keep trucking assets off their books. These all seemed to indicate a strong future for the leasing industry, with ownership considered to be the old way of doing business. Among newer regulations affecting fleet ownership were federal laws that required commercial vehicles over 10,000 pounds gross weight to undergo an extensive safety inspection every 12 months. In addition, there were new Environmental Protection Agency regulations regarding underground storage tanks, and the federal Clean Air Act required vehicles to meet tougher emission standards.

Amtralease, a network of independent leasing companies, estimated that 30 percent of all commercial trucks in the early 1990s were leased, compared to less than 20 percent in the 1980s. However, Amtralease also reported that profits for truck-leasing companies were flat despite the increase in market share. Although some companies leased large fleets, the typical customer leased three to four trucks.

At the end of the 1990s the industry started to grow again, and 35 percent of all trucks in service in the United States were owned by rental or leasing companies. U-Haul continued to dominate the industry, owning well over half of all the rental trucks in service in the United States with 52 percent of the market. The Budget Group, with Budget Truck Rentals and Ryder TRS, made up 27 percent of the market. The remaining 21 percent consisted of a few other mid-sized players, such as Rollins Truck Leasing Corp. and Penske Truck Leasing, plus thousands of small operators. The industry generated 1997 revenues of $10 billion, employed 46,566 workers, and had an annual payroll of $1.4 billion.

By the beginning of the twenty-first century, the larger companies had developed Web sites and launched online booking. Internet access allowed customers to communicate directly with the companies, receive instant confirmation of booking, and make payments online. According to the 2001 Truck Renting and Leasing Industry Report, issued by industry analyst MacKay & Co., the truck leasing and renting industry was booming. The Truck Renting and Leasing Association (TRALA) reported more than 150,000 people employed within the industry. Together, annual revenues were more than $23 billion. Leasing and rental companies were responsible for more than 40 percent of new commercial medium-duty trucks, and more than one-third of Class A trucks in 2000.

In the middle of the first decade of the 2000s, the industry continued to grow. According to statistics collected by ACT research and published by the Heavy Duty Manufacturers Association (HDMA), an estimated 235,886 truck trailers were shipped in 2004, up 29 percent over 183,162 shipped in 2003. In December 2004, there were an additional 31,000 units ordered, which was the largest monthly total in six years. ACT Research also noted increased demand for Class A trucks, perhaps due in part to the upcoming tighter EPA emissions regulations that were in effect by 2007.

Other new developments in the late-2000s included the addition of "smart" technology features such as global positioning system (GPS) capabilities and microchip data, as well as wireless capabilities. The technology used by Ryder sent regular information updates on the location and speed, among other features, of the trucks for monitoring and tracking. Other important technologies in the late 2000s were related to continued security strengthening and regulation of the vehicles and the industry.

Valued at approximately $18.7 billion in 2008, the truck rental and leasing industry began to consolidate, with such mergers as the 2006 joining of leaders NationaLease Purchasing Corp. and Ameriquest Transportation and Logistics Resources Corp. Longtime industry leaders U-Haul and Ryder remained at the forefront of the industry. At the beginning of 2009, Ryder acquired Edart Leasing Company LLC, which operated a truck leasing, commercial truck rental, and contract maintenance in the Northeast.

The weak economy in 2008 and 2009 negatively affected the truck rental industry. The president of U-Haul's parent company AMERCO, J.L. Shoen, reported the state of his company bluntly in his cover letter to the shareholders in the fiscal 2009 annual report, saying, "Fiscal 2009 was a year greatly influenced by the down economy and naysaying by the prognosticators. U-Haul products are a value proposition and that worked in our favor. Overall, every time we found a toe hold over the last year, we lost somewhere else." The issue to which Shoen was speaking primarily was the bottoming out of the U.S. housing market during 2008. Because the majority of U-Haul's business was focused on residential "do-it-yourself" movers, it was most affected when consumers stop buying and selling their homes. U-Haul responded in the same manner as much of the industry--by cutting costs and postponing or eliminating expenditure. One of the ways in which U-Haul and other truck rental companies cut annual costs was to retain equipment on hand rather than purchasing new trucks to add to the rental fleet.

Current Conditions

By the early 2010s, the truck rental and leasing industry was poised for an optimistic future. According to a March 2012 IBISWorld report, "Low freight activity and a down housing market decreased demand for truck rentals and leases during the recession, but the industry is set to pick up over the next five years." An uptick in the housing market, as well as increased shipping activity, was expected to boost the industry, which IBISWorld valued at $16 billion. Another factor that was expected to promote truck rental was increased government regulations that made truck rental more cost-effective than purchasing.

Industry Leaders

Ryder System, Inc.
In 2011, Ryder System, Inc.'s fleet included more than 148,000 vehicles with earnings of $6 billion, a far cry from its origin. In 1932 founder James Ryder was a high school student in Florida working as a summer laborer for 25 cents an hour when he learned that another student was making 35 cents an hour driving a truck. The next summer Ryder purchased a 1931 Model A Ford and went into business as a commercial hauler. Ryder struggled through the Depression, slowly building a fleet, and by 1937 the Ryder Trucking Co. owned 37 trucks. In 1938 Ryder learned that a Miami beer distributor was interested in leasing five large trucks. Ryder presented the distributor with a proposal, and Champagne Velvet Beer became the company's first lease account.

Ryder continued as both a local leasing company and an over-the-road transport service for several years. Then, in 1945 two businessmen from Tampa, who had acquired the Anheuser-Busch beer distributorship for Florida, contacted Ryder. Beer shipments were beginning to arrive from the brewery in St. Louis, and the distributors needed trucks in a hurry. Ryder met the need by pulling trucks from its over-the-road fleet. Overnight, Ryder became the largest truck-leasing firm in Florida. By the end of the 1940s, Ryder's leasing operations topped $1 million and far exceeded its over-the-road trucking business. Ryder also signed a lease agreement with the Minute Maid Corporation, which gave Ryder national exposure. By 1949, when the company changed its name to the Ryder Truck Rental System, the leased fleet had grown to more than 500 trucks.

In 1955 Ryder reorganized and went public, creating Ryder System, Inc., a holding company that owned the Ryder Truck Rental System and the Great Southern Trucking Company, which Ryder acquired in 1952. In 1956 Ryder initiated a corporate identification program, and by the following year, the entire leased and over-the-road fleet carried the familiar red and black "Big R" trademark. The leasing division also became known as Ryder Truck Rental.

Between 1956 and 1959, Ryder acquired 21 more companies, including Denver-based Baker Truck Rental, which was then the largest truck leasing firm west of the Mississippi River, and the Alabama-based Dixie Drive-It-Yourself System. Although the "Big R" trademark created some uniformity, the rapid growth left Ryder with trucks painted almost every color imaginable. In 1962 Ryder adopted a common color scheme for all its trucks: bright lemon yellow with a black undercarriage. In 1965 Ryder sold its motor carrier division to International Utilities and focused on the growing truck leasing business. International Utilities continued to operate the trucking business under the Ryder name until 1982.

In 1968 Ryder formed a consumer truck-rental operation known as Ryder One Way. Initially, Ryder planned to purchase 300 trucks for consumer rental, but a market test in six southern states indicated a greater demand, and Ryder began operations with 1,000 trucks and vans. By the end of the year, Ryder One Way had dealers in 325 cities across the country and had ordered another 2,000 trucks. In the mid-1970s Ryder secured a contract with the U.S. Department of Defense to provide rental trucks for military personnel at 110 bases in the United States. By 1987 Ryder had surpassed U-Haul as the largest consumer truck-rental operation in the United States. However, U-Haul regained the lead in the early 1990s. In June 1998, the Budget Group purchased Ryder's truck rental division and ran it under the name Ryder TRS. At the end of the first decade of the 2000s, Ryder maintained 25,000 rental trucks at 80 locations, but its primary area of business was full-service commercial leasing with 109,000 trucks. Ryder had also become a major supplier of integrated logistics services in the United States.

U-Haul International Inc.
In the first decade of the 2000s, U-Haul International Inc. was one of the largest consumer truck-rental businesses in the world. U-Haul was a subsidiary of AMERCO, one of the largest privately owned companies in the United States. The company entered the self-storage industry in 1975 and became the second-largest operator of self-storage in the United States, with 232,000 rooms, over 19 million square feet of space, and 800 company-owned storage locations by 2005. U-Haul reported that more than 98 percent of the American public recognized the name U-Haul, making it one of the most recognizable registered trademarks in the world.

Like Ryder, U-Haul had humble beginnings. In 1945 L.S. Schoen slipped out of a military hospital to move his wife and newborn son from Los Angeles to nearby Corona, California. He rented a beat-up utility trailer from a service station, and that night he wrote in his diary, "I am intrigued by the business potential of this idea especially from the standpoint of one-way rentals." He was discharged from the military later that year and moved his family to Portland, Oregon. Within two weeks, he had purchased his first trailer and painted "U-Haul Co.; Rental Trailers; $2.00 per day" on the sides.

By 1946 Schoen had a fleet of 70 trailers spread out from Seattle to Los Angeles, and in 1948 he decided to go national. He offered one-way rentals from the West Coast to anywhere in the United States. The only catch was that customers had to find service station managers at the end of their trips who were willing to become Schoen's agents. The plan worked, and by the end of the year U-Haul had a fleet of 200 trailers and a network of agents nationwide.

In 1951 U-Haul launched a low-risk program for fleet ownership of its trailers as a way to raise money and expand the network even faster. Investors would purchase trailers from U-Haul, which would assume full responsibility for insurance, maintenance, and distribution. Each month, fleet owners would receive a report and payment for rental activity on their trailers. The fleet-ownership plan raised $2 million in the first two years. By 1955 there were more than 10,000 U-Haul trailers in 200 fleets scattered around the country, and U-Haul was adding 600 trailers a month.

U-Haul began renting trucks in the late 1950s and dominated the consumer truck-rental industry into the 1970s. However, in 1970 U-Haul acquired A to Z Rental and began a transition from renting trucks and trailers to renting everything from garden tools to dinnerware. In 1974 U-Haul opened more than 100 U-Haul Rental Centers. The transition was hastened by the Arab oil embargo in 1973, which eventually resulted in the closing of many independent service stations that had been the backbone of U-Haul's rental network. In the late 1960s, U-Haul trucks and trailers were available at more than 14,000 service stations, but by the mid-1970s more than 6,000 had gone out of business.

By the early 1980s, there were more than 1,100 U-Haul Rental Centers. However, while it was expanding into new rental businesses, U-Haul was paying less attention to its aging fleet of trucks and trailers. Ryder, whose trucks were air conditioned and featured automatic transmissions, began cutting into U-Haul's market share and overtook U-Haul in 1987. The year before U-Haul was knocked out of first place in consumer truck rentals, two of Schoen's sons gained control of the company and forced their father to resign. They began closing the rental "supermarkets" and refocused on renting truck and trailers. U-Haul eventually regained the market lead it had lost to Ryder. However, the economy caused U-Haul's parent company financial stress at the end of the first decade of the 2000s. AMERCO filed for Chapter 11 bankruptcy protection in June 2003, from which it emerged in March 2004. U-Haul was not included in the filing, however, and generated $2 billion in 2009 sales. As of 2012, U-Haul rented trailers through 15,000 independent dealers and 1,400 company-owned centers. The company employed more than 16,000 people and generated annual revenues of about $2.2 billion.

Other Leaders.
Another leader in the truck renting and leasing industry was Penske Truck Leasing Company, which had 2011 sales of $869.3 million. Penske rented 200,000 vehicles from 1,000 locations worldwide and employed 16,875 people. Budget Truck Rental and Elite Truck Rental were also significant industry firms.

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