Morning, everybody. We're gonna go ahead and get started, so if I could ask you to please take your seats, that'd be great. Welcome to Ryder's 2022 Investor Day. We're really excited that you could be with us here today. It's nice to see a lot of familiar faces in person again after a long time, and welcome those of you listening virtually as well. We really appreciate you taking the time this morning. We're hoping that you walk away from today with a much deeper understanding of Ryder's business model and the changes that we're driving to deliver strong long-term returns for shareholders. I'm Bob Brunn. As many of you know, I head up investor relations and corporate strategy at Ryder. It's my pleasure to be here with you today. I've actually been at Ryder for 34 years.
That was my first job out of grad school, doing M&A, rolling up student transportation school bus companies, a division that we later sold. I've done a lot of different things at Ryder since then, kind of made my way through finance, some roles in marketing, the field organization. I was in treasury. I worked with Karen Jones on new product development recently. It's been a great career, and that path is pretty typical for employees at Ryder. It's a culture where you can move around and do a lot of different things over time, have a lot of different experiences at the company. A few housekeeping things I wanna cover before we get started. The emergency exits are out this door to the right, behind where the registration desk was. The restrooms are out in that direction as well.
We are audio and video recording today's presentation, so if you would please mute your cell phones. We don't wanna pick up any of that noise on the recording today, so I'd appreciate that. For those of you who want to use Wi-Fi, the password here for the conference room is "bewell'', all one word, in small caps, "bewell". The presentation deck was emailed to everybody who had registered for the conference today this morning. It was also sent out to our typical financial community investor distribution list. If you did not receive the presentation, you can also get it on our investor website at investors.ryder.com. We're not printing copies from an environmental perspective, but you can certainly watch the slides on the screen or pull it down on your computer from the website.
At Ryder, safety is a core part of our culture, and we typically start our meetings with a safety message, so I'm gonna give you a brief safety message this morning, and it actually stems from an incident that happened to me when I was in New York, when I was in college. I was staying at the Essex House here at that time, and I was out with friends at the Village Vanguard one night having drinks. Got back very late. We were having a nightcap with a bunch of folks in the hotel room, and we smelled smoke in the hotel room. Sure enough, there was a fire in the hotel. We actually ended up pulling the fire alarm, and everybody in the hotel had to evacuate down to the lobby.
It was kind of a jokey kind of experience until we got to the eighth floor and got stuck because the smoke was so thick we couldn't go down any further for about five or 10 minutes. Seemed like an eternity at the time, but everybody escaped the fire without any incident. My takeaway from that was before I go to sleep at night in a hotel room, I always check that placard that's on the door in your room to make sure I know where the emergency exit is in case there's a fire. I would encourage you to do that anytime you're staying in a hotel. Today's presentation includes some forward-looking statements here, as you can see in the presentation slide on the safe harbor language. Let me walk you through the agenda here today briefly.
I'm gonna bring up Robert Sanchez first and Robert is gonna lay out the key elements of our balanced growth strategy to drive long-term shareholder returns. After Robert, we'll have Steve Sensing come up. Steve runs both our supply chain and dedicated business, and Steve's gonna talk about the differentiated value proposition we have in logistics and how that's enabling us to capture profitable growth in this really fast-growing market segment. After Steve Sensing, we'll have Steve Martin join us. Steve runs our dedicated business, and he's gonna talk about the opportunity in that space and how our products and services are different than others in that broad space.
After our first three speakers, we're gonna have a 20-minute Q&A session, so we'll bring everybody up from the first group, give you a chance to ask some questions both in the room and virtually, and then we'll take a 10-minute break after that. Once we finish the break, we'll come back for the second half of the morning. Tom Havens will kick it off and talk about fleet management and how we are mitigating cyclicality that we've historically seen in that business and targeting higher growth, high value market segments to focus on from a capital spending standpoint in that business. After Tom, we'll have Karen Jones come up, who's our Chief Marketing Officer. Karen's gonna focus her remarks this morning on innovation and what we're doing from a new product development standpoint to drive longer-term growth in the business.
Then finally, following Karen, we'll have John Diez, who's our CFO. He'll bring all the presentations together from a financial standpoint and talk about the plan that we have to deliver strong long-term returns for the business. After we finish with those speakers, we'll have a second Q&A session. All the speakers will come up, so you'll have a second crack at the morning speakers as well as the folks from the second group. We do have some other executive members of our leadership team here in the room today. Robert will introduce those as we go through the morning. We also have some other key leaders of Ryder here. I do wanna take a minute to thank a few of those folks who have worked a lot on today's meeting, most importantly, Calene Candela, our Group Director of Investor Relations.
Thank you for all that work. Ray Tharpe in the back there, if you wanna raise your hand, Ray, who heads up our corporate strategy area. Got a couple other folks from my strategy team here too, Robert Friedman and Juan Brana over here on the side. Appreciate all their work, as well as my able administrative assistant, Sheila Conway, who's out at the registration desk. With that, let me bring up Robert.
All right. Thank you, Bob.
Well, good morning everyone. Listen, it's great to see everybody in person. I feel like the last couple years, we're probably all a little tired of staring into sometimes just blank screens and sometimes screens with videos. It's great to get everybody back together and really get a chance to talk about all the exciting things that are going on here at Ryder. My name is Robert Sanchez. I'm the Chairman a nd CEO of Ryder. I think I know most of you, but those of you that I don't know, I've been with Ryder for 29 years, and like Bob, I had the good fortune of certainly in my first 20 years, working across a lot of different parts of our business, both on the functional side and on the business operations side.
I've had the privilege of being the Chairman and CEO for the last nine years. I'm excited about the opportunity to share with you the good work that we're doing here at Ryder, especially over the last couple years, and the changes that we've made in the company. I'm actually even more excited about having you meet some of the broader leadership team that is here, who's really delivering and executing on this plan. You can get a chance to really hear directly from the folks that are running the business. I know you spent a lot of time talking to me, talking to Bob and Calene, who do a great job on the IR side, but this is really an opportunity for you to hear directly from them.
One thing I wanted to do before I get started is I do want to address and give you an update on the letter that we received on M ay 13th from HG Vora. I spoke to Mr. Vora late yesterday, and I informed him that the board had reviewed his letter and had determined that the price indicated in his letter was not indicative of the value of our company. Our board remains committed to maximizing shareholder value and believes that the plan that we have going forward would result in a much higher value for our shareholders. That's the update I have on that part.
What I wanna spend the time talking about today is the transformation that we're leading in this business and the changes that we've made on executing on our balanced growth strategy over the last couple years that have really changed the profile of our business, going forward. Let me start off with a quick video that just kind of gets you in the right Ryder mood, gives you a little bit of the history of Ryder and some of the important things that we do to help drive our economy.
When you were young, did you ever wonder where the toys you played with came from? How food got into your refrigerator, computers on your desk, cars in your driveway, packages on your doorstep? Sure, they were ordered online or came from a store, but what did it take to get them there? What if we told you it began with a man, a truck, and a dream? A dream to be innovative by using the most sophisticated technology to build the solutions of tomorrow, today. A dream to build smarter warehouses where people and automated technology work together to engineer more efficient supply chains. A dream to deliver flexibility, capacity and resilience through transportation logistics solutions built on the nation's most reliable fleet of vehicles, professional drivers and expert technicians. A dream to deliver trusted solutions for companies so they can focus on their core business.
At Ryder, what began with a man, a truck, and a dream has become the only fully integrated end-to-end supply chain and transportation logistics company in the industry. Sure, we started as a truck rental company. Today, we have grown into a Fortune 500 company, and our customers continue to grow with us. The cereal you ate this morning, the shoes on your feet, the online order delivered to your door, the television you watched, chances are those were either assembled, packaged, fulfilled, or delivered through the Ryder supply chain and transportation network. We enjoy working behind the scenes because it's never really been about a man, his truck, and his dream. It's always been about businesses big and small and making their dreams come true.
All right. Gives you an idea of all the things that Ryder does. You know, listen, most people know Ryder for our iconic rental trucks, the ones that are right behind me here. And that's really what everybody, when you say Ryder, it's typically what comes to mind, for folks. That's about 10%-15% of the revenues of the company. The majority of the company is the stuff that we do, as I said in the video, behind the scenes. You don't see Ryder in the majority of the work and operations that we do. We're heavily involved in everything that happens, everything that moves in the economy.
We do business with 50,000 companies, and I'll talk about the different services that we provide, but most of the things that you use in your everyday life were probably touched at some point, or Ryder had something to do with getting them to you. You can see there, I said we have 50,000 customers. That's a small sample of the companies that we do business with. You can see it's really across your entire day are things that Ryder has moved and gotten them to you in an efficient, safe, and reliable manner. What's the key messages that we want to get across today?
First and foremost, we want to talk about our balanced growth strategy and the execution that we've had on that strategy over the last couple years to really help transform the business model at Ryder, and help improve our returns and make our returns more reliable, make the highs higher and the lows higher also. Also want to talk about the ongoing tremendous long-term opportunity for profitable growth that continues to exist at Ryder. There's secular trends that really favor outsourcing, which is really most of what Ryder's business model is about. Also, we have multi-year initiatives that we're currently executing on, which we think still have a lot of runway.
The goal here is to increase our core earnings of the business, continue to increase the core earnings of the business, certainly outperform prior cycles and achieve the target returns that we've laid out. Last but not least, we wanna also talk about some of the things that we're doing for longer term growth.
Some of that is investing in the current businesses that we're in and the current product lines that we're in, but some of it is also looking at disruption and not waiting for disruption but in many cases, leading the disruption in our industry and making investments in that area and technology, which is really gonna position us not for, not just for growth in the next three or four years, but for growth in the next 10 to 90 years as we've been in business for that long. Who is Ryder? First and foremost, we are in the transportation and logistics outsourcing business. Most of the things that we do, a customer can do on their own. Our job is to make.
To be able to deliver those more efficiently, more reliably, and more safely than customers can do. We're primarily focused in North America. We are organized into three business segments: Fleet Management Solutions, which is about 47% of our revenues, Supply Chain Solutions, which is 38% of our revenues, and Dedicated Transportation Solutions, which is 15% of our revenues. A few key points that, beyond what I've already mentioned, is we maintain a fleet of just under 240,000 vehicles, so that is one of the largest fleets in North America. We do that with the employee base is just under 43,000 employees, again, focused in North America. Of the 43,000, we have about 14,000 warehouse associates that work for us, running distribution centers.
We have over 10,000 professional truck drivers who are doing the many of the deliveries for our customers. We have about 5,000 technicians, diesel technicians, who do the maintenance on the vehicles I just mentioned. You know, I think it's important to mention, when I said North America, that's really important because we don't strive to be a global provider. We're not trying to be the best all over the world. We made a decision many years ago that we want to be the best in North America. We think the market here is big enough, and it's a lot easier to be really good in one region than it is to try to be great in the whole world. We wanna be great, and we wanna be the best in North America.
What that means is we have very strong operations in the U.S., Mexico, and Canada. As a result of that, we do provide services to many companies that are doing business across this, the region. We have very strong operations in Mexico. As an example, we do business with a lot of companies that may be doing manufacturing in Mexico for consumption in the U.S. What that means is we do about 30,000 border crossings every month. That's more than just about any company. That gives you an idea of the scale of the operations that we run for some of our customers. I talked about the three divisions. Let me give you a little bit more background on what each division does or each segment does. FMS, you can think about it.
If we're in the outsourcing business, FMS is the outsourcing of a truck and of a truck fleet. A company can go out and buy their own trucks, do their own maintenance, and then deal with selling the vehicle at the end or figuring out how to deal with all the regulatory constraints and regulatory changes around truck fleets, or they can come to Ryder, and we can do all that for them for a monthly fee. We're gonna do a full service lease, which means we buy the vehicle. We're one of the largest purchasers of commercial trucks in North America, so we get preferred pricing. We're gonna do all the financing of that vehicle. It's gonna be a lease. We're gonna do all the maintenance of that vehicle.
We have a network of 750 truck maintenance shops in North America, which we think is an important competitive advantage for us. There's only one other company that has a network of that size. It's very hard as a new entrant to be able to create that network. Then we resell it through our network of used truck centers. We're one of the largest independent retailers of used trucks. Turnkey solution for fleet is what FMS provides. In addition to that, we have a rental fleet that we use to supplement our customers' truck needs during peak periods. DTS, or Dedicated Transportation, is about the outsourcing of not just the truck, but the truck and the driver and all the operations of a private fleet.
I need a private fleet for my company to deliver my products to my customers. I can try to run all that myself, try to hire my own drivers, try to create the most efficient routes, or I can come to Ryder, and Ryder can do that for me. We are very good at optimizing routes for private fleets. We're very good at hiring truck drivers, which as you all might imagine, is a really important skill to have these days. That's one of the things that we really bring to the table as we offer dedicated transportation. A lot of growth going on in that business, as you might imagine right now, a lot of good work that we do.
Finally, there's Supply Chain Solutions, and that's the outsourcing of broader transportation and logistics services. That could be running a dedicated operation, as I just mentioned, but it could be running a warehouse and distribution system. We operate over 300 distribution centers in North America primarily for our customers' business. It's about 85 million sq ft of warehouse space that we're running, and we optimize the operations within those facilities. Transportation management and brokerage. In many cases, we act as a traffic department for our customers. Rather than have your own traffic department within your company, you could outsource that to Ryder, and we run the traffic department for you. We operate about $7.5 billion worth of freight through that operation.
Then we have a brokerage business which we're growing, and you're gonna hear a little bit more about that later. More recently, e-commerce fulfillment. You know, one of the changes in our industry has been, and really in the economy, the shift towards e-commerce. So we did an acquisition early this year to really jump-start our operations in e-commerce fulfillment and helping customers that wanna switch from more traditional retail-type delivery to e-commerce fulfillment. So you're gonna hear a lot about that. We also did an acquisition several years ago that got us into the big and bulky last mile delivery. So that's not just your standard e-commerce, but this is things like furniture and office equipment, things that typically don't go through a parcel company.
We are one of the companies that provides that type of service. Last but not least, professional services. We got a lot of smart people. We have about 500-600 engineers who design supply chains, design logistics systems for our customers that we then can come in and operate. As you can see, we got the full suite of services that we provide our customers across our company. Important to note are the synergies that exist here. All the vehicles that are used by supply chain and dedicated come from FMS, so they're leased and maintained by our FMS business. 50% of the sales in our dedicated business come from salespeople in our fleet management business. A customer that's outsourcing and leasing vehicles from us also needs help with drivers.
They get it. We upsell them to dedicated. That means that the margin for that truck increases by two-three times, and the capital investment is primarily the same. It's the truck. Really value added for us to do that. Dedicated and supply chain, I think it's important to note, share a lot of things. They share technology. You're gonna hear about RyderShare. That's a technology that we've rolled out, a visibility and collaboration tool for our customers, shared across dedicated and supply chain. I think very importantly is our driver recruiting network. We have a very extensive driver recruiting network that helps us sustain the 10,000+ drivers that we have, and that recruiting network is really leveraged across both. Some key points there.
Regardless of which segment you work in at Ryder, we have a shared vision, mission, and values at the company. Really, our mission is really about perfecting the supply chains that deliver for our economy. What do Ryder people do? They wake up every morning saying, "How am I gonna do my job better? How am I gonna make that experience for the customer and their supply chain perfect?" Because in our business, especially around the supply chain and dedicated business, customers are putting a lot of trust in Ryder, and they're basically handing to us either their entire supply chain or segments of their supply chain, which are critical to the success of their company.
In order for us to really be good at what we do, we have to wake up every morning obsessed with how do we do a better job of delivering for that customer, and that's what Ryder people do. We focus on reliability, efficiency and safety in those supply chains. Everything you're gonna hear today is about that, is how are we continuing to be better at that? The values are the values you would expect from somebody that is gonna be in a long-term relationship. Most of our customers we've been doing business with for decades, so our relationships with our customers are very intimate. You know, they rely heavily on us.
In order to keep those relationships going, we have to have people that are trustworthy, and we have to have people that are really focused and determined on making things better for the customer and ultimately are gonna be responsible. Just like any other long-term relationship, those are the kinds of people that we have at Ryder. The markets that we play, and I think the key takeaway here, is they're very large markets. You know, there are a lot of trucks on the road out there, and there's a lot of trucks out there that aren't leased. There's a lot of private fleets out there, and there's a lot of private fleets that are done in-house. There's a lot of logistics operations and supply chain operations in North America that are not outsourced.
You can see the key number to look at in each of these segments is the red circle. The red circle is the non-outsourced segment within each of our businesses. You can see across any of the businesses, less than 25% is outsourced today. We call those folks the do-it-yourselfers. There's a lot of do-it-yourselfers out there. There's a lot of do-it-yourself companies that currently are running these operations themselves, and as we'll talk to in a minute, it's getting harder and harder for them to do that. Really all we need to do is we need to continue to chip away and continue to convert more of those do-it-yourselfers to outsourcing. Because once they outsource, they tend to remain outsourced for a long time. That's really a lot of our focus around the growth.
Key takeaway here is there is a significant growth opportunity in this business for a long time. I think a good example of an industry that has gone through this outsourcing wave has been payroll. You know, most companies back in the 1960s used to do their own payroll. Well, payroll started to get a lot more complicated as states started making changes to payroll taxes and making it more difficult to calculate. You started to see companies really begin to outsource that work, and today many, many companies, the majority of the companies, especially large companies, do outsource their payroll. I think the same kind of thing is happening in transportation and logistics, and that's why we're excited about the opportunity to be a part of that.
Not only are the markets very large, but there are secular trends that are really driving more outsourcing. These are the things that are making it harder for do-it-yourselfers to continue to do things themselves in transportation and logistics. First and foremost, it's not a mystery to anybody. It's on the front page of every newspaper. You hear it in the news. It's the discussion of every boardroom: supply chain disruption. That is the name of the game today in the economy, and that is right in the sweet spot of where Ryder can help. The disruptions that you're seeing in the supply chain are bringing supply chain logistics to the forefront of most businesses. It, where it used to be under a transportation manager or logistics manager, it's now a discussion with the CEO and the board.
That's really good for Ryder because that means companies are going to look to how can they improve, and they're going to come to companies like Ryder, and certainly part of the story of why we're seeing some of the growth that we're seeing in those businesses. Labor constraints across the board, but one of the places that has been hit the hardest has been truck drivers, and you hear that in the news all the time. The harder it gets to hire a truck driver, the better it is for Ryder. Because even though it's still hard for us, we're really good at it, and that's what we do. We're seeing a lot of companies looking for. People talk about the driver shortage, but I'll tell you the same thing exists for technicians and more recently, even for warehouse associates.
We're seeing it more challenging to find those. Again, those are areas that we really specialize in. Add to that, these are the more recent changes. If you go back 10 years, there was the start of other things that made maintaining a truck more complicated, and that's been the quest for cleaner air and safer roads. Means the government has imposed much stricter regulations around emissions, around who can drive trucks. That creates more complexity. It's just like the payroll taxes in for payroll. The more regulation that comes into transportation and logistics, the more complicated it gets, the harder it gets for companies to do it on their own. That's really driving more outsourcing. We're not seeing that slow down as you might imagine. We think that's continuing to add. Finally, the last thing I'd mention is e-commerce.
E-commerce has made most companies rethink how they're doing things, and that's an area that Ryder can now really, really help in. Those of you that have been following us for a while know that prior to 2019, we were focused on a growth strategy across all three business segments. We saw the opportunities in the big market. We saw the secular trends that favored. We had parts of the business that had been relatively flat in terms of growth, and we saw an opportunity to grow. One of the things that we learned is that in parts of the business, there could be such thing as too much growth. Primarily in our fleet management business, as we invest in new in vehicles for new leases, it drives a lot of negative free cash flow.
When you have years where the free cash flow goes negative for multiple years because you continue to grow at a high clip, that creates a lot of angst and anxiety for investors. More importantly, I would tell you the other thing we learned is that we had historically kept residual values at kind of a historical average. We kind of middle the fairway attempt at estimating our residual values, and for a long time that worked. Over the last couple cycles, the used truck market became much more volatile. We decided, you know what? That volatility, we need to change things.
We reduced our residual values back in 2019 to close to trough levels to really take out that risk, and I'm going to talk a little bit about more about what we did exactly there. I think that is also a major change. We realized, you know what? We need a balanced growth strategy that's going to balance top-line growth with returns and free cash flow. That balanced growth strategy is a better Goldilocks scenario for a company like Ryder. It helps us accelerate the growth in our higher return businesses while we continue to manage the growth in our asset-intensive business. First thing we wanted to do is de-risk the model, enhance returns and free cash flow, and then drive long-term profitable growth.
That is what our balanced growth strategy is focused on. When I talk about de-risk the models, I just mentioned the lowering of the residual values. Important to note, we did that on our books from an accounting standpoint. You guys saw the additional depreciation we had to take over the last few years. More importantly, we did it in our lease pricing. If you think about with a lower residual on the lease price, that means that less of the return for that lease is dependent on what you get for the vehicle at the end of its life, and more is guaranteed up front. That de-risks the returns, if you will, with expected returns that we're going to get. That was an important change that I think we made.
What that resulted in was an increase of $200 million in our annual depreciation on a normalized run rate. The earnings that you're seeing are with that additional depreciation. You can see the earnings power of the company that we're beginning to generate really comes through. On an accounting side, I think one really important thing we did, and John's going to talk about this in a lot more detail. I think we've really minimized the likelihood of losses on used trucks and the need for additional depreciation. Take that off the table. The other thing we did more recently is really around supply chain and dedicated contracts.
As we got into this hyperinflation period over the last year, especially around driver wages, we realized that our contracts, even though they were set up to handle driver wage increases, we weren't set up to handle that level. As we've gone in and gotten price increases for customers, we're adjusting our contracts to make sure that in the future, as that happens, we're able to pass those through quicker. Around improving returns, I'll tell you the most important thing we've done there is around lease pricing. I mentioned that a little bit, but we lowered the residual assumption on our lease prices. The other thing we did is we've realized managing of the life-cycle of a truck has gotten more complicated with all this technology change. We need a bigger spread on that investment.
Historically, in our lease business, we were targeting 60-100 basis point spread. We increased that to 100-150 basis points over the last couple years. That has made a significant difference in the returns. You can see we've, as of the end of last year, we had repriced about 40% of the portfolio, translated to about $45 million in annual earnings improvement for the company. We have 60% of the portfolio yet to reprice. As those leases term out, we reprice them at the higher returns and the lower residuals. That will lead to another $80 million of improved annual returns in our earnings once we get through the second half. $125 million over the cycle. As we renew those leases at the higher returns.
Another important initiative that we've been talking about for the last three years has been our maintenance cost reduction initiative. We spend about $1.2 billion-$1.3 billion a year maintaining trucks. 240,000 vehicles. This costs a lot of money. We set out a goal couple of years ago to reduce that by $100 million. Now, that's not just reducing because the trucks are easier to maintain. It's process changes and being able to buy parts more effectively. The good news is, as you'll hear from Tom, the team has executed really well on that, and we are expecting to surpass the $100 million of annual savings this year versus what we were spending in 2018. Really good progress there.
Obviously, a big improvement in the earnings story for the company. Then I think the big one for free cash flow is not to lose sight of. We've moderated the growth in our lease business. That is probably the most important lever for free cash flow. If we really crank up growth in our lease business, you're going to see free cash flow come down. If we moderate it, you're going to see free cash flow stay up. We've really focused on higher returns and moderate growth in our FMS business to help drive free cash flow. Next is around long-term profitable growth. Really a lot of that is really accelerating the growth in our higher return supply chain and dedicated business. Higher return asset light business.
We feel that the more we can grow that part of the business and the earnings in that business, the more value we create for our shareholders. You can see in 2015, supply chain and dedicated represented 37% of the revenues of the company. This year, supply chain and dedicated will represent 53% of the revenues of the company. For the first time, they will represent the majority of the revenues of the company. Our strategy is to continue to move that number up. Over time, really, it becomes definitely the larger part of the story here at Ryder. While we continue to grow the FMS business, we're going to grow the supply chain dedicated faster. That helps improve the returns, I think, and the value of our company.
The other thing that's important is that as we continue to generate positive free cash flow and not overgrow the asset-intensive business, we have balance sheet capacity to do acquisitions, to do share buybacks. You know, we've done a couple of big acquisitions over the last year or the last six, seven months, and we've also are in the middle of a share repurchase program. It puts us in a really good spot. Again, that Goldilocks scenario for, I think, for Ryder and our investors. One of the key things to growth has been our Ever Better campaign. You've all probably seen this on the news channels, the Ever Better story from Ryder. The focus of this campaign was to make sure everybody's aware of all the things that Ryder does.
We're not just the rental truck company, truck rental company. We have all these logistics and supply chain services that are really critical in today's environment of supply chain disruption. As you can see from the stats here, we've had really good success with that. Our leads are up 200% for our supply chain business and really helped to drive some of the growth you're going to hear Steve talk about later. This is just a, you know, how does this all play out and how do the results look before we started this transformation to now? In 2018, prior to us making these changes, you can see on the left side of the slide. Then on the right side, here's what we expect to do this year.
Key changes I would tell you, obviously, the change in supply chain dedicated as a percent of the total, but free cash flow, when we were really growing our lease business, about 10,000-11,000 vehicles, we had negative free cash flow of about $900 million. We're going to generate $550 million-$650 million of positive free cash flow this year with a more moderate growth. Now, $300 million of that is from our U.K. sale. So take $300 million out, it's still $250 million-$350 million, a significant improvement in free cash flow from where we were while still providing the growth opportunities that we need in that part of the business.
If you look at our earnings, obviously a significantly different story, the $13.40-$14.40, which we just upped today to that number, compared to five ninety-five, which was the last, really the last peak period for us. We understand that there's, right now we're in a very frothy environment in terms of the truck shortage. What we wanted to show you here is what we would call core EPS. Moderating used truck gains, moderating our rental business. We still are at $9-$9.50 compared to $5.95 in 2018. You can see it's just a different profile of the business with some of these changes. Our ultimate metric is return on equity.
You know, we had historically done anywhere in the low teens was what our ROE was for the prior, call it decade and a half. We're going to generate 24%-26% ROE. We think over the cycle, it's a high teens return on equity business now versus it used to be a low teens return on equity business. There's still a lot of growth opportunity here. If you think about our core earnings, take out some of the used truck and rental noise. You're going to get some of that as we go through the cycle. The core earnings of the business, we think we have a lot of opportunity to continue to grow that. First, getting our supply chain and dedicated margins back to where they need to be.
That's going to create some earnings tailwind as we go into next year. Our lease pricing initiative, I said we still got 60%, including this year, to reprice and get into get at the higher returns. That's going to be some tailwind over the next several years also. Those two are going to help us. They're line of sight initiatives that we have to help improve our core earnings. We also have revenue growth, and really the earnings that are going to come from continuing to grow our supply chain dedicated business and even our lease business. That's going to be the bulk of what's going to drive, you know, continued earnings improvement, core earnings improvement of the business.
With the balance sheet, capacity, we can still do acquisitions and share repurchases. You guys are probably very familiar with this. There's two things that we've changed here from what you've seen. You know, earlier this year, we changed our ROE target from 15 to high teens over the cycle, and we also changed our fleet management earnings as a percent of earnings before tax as a percent of operating revenue. We changed that from high single digits to low double digits as we started to see really the business model changes that we've made come through. Today, we've announced two other changes that we're making.
First, we think supply chain, given all of the things that are going on in the market and the demand for supply chain solutions, we see that as a double-digit growth business going forward organically. We've changed that from high single digits to low double digits. We also gave you now a total growth for the company. We think the total growth for the company is high single digits growth, again, primarily driven by the higher growth in supply chain and dedicated and then the moderate growth in FMS. Around ESG, look, I'll hit a couple of the high points here. First, I think Ryder has a critical role to play in the energy transition for transportation.
We have a fleet, as I've mentioned, of about 240,000 vehicles. We do business with 15,000 customers. Those customers are looking to Ryder to understand, how do we do this transition? They're gonna need help. This transition from diesel to electric, whenever it starts, we think it's gonna take possibly decades to really get through. You're gonna have companies that'll have diesel trucks, and they may have some electric trucks, and someone's gonna need to be there. A company's gonna be there to help guide them through that, and I think we're very well positioned to do that. We think we have an exciting role to play in that energy transition, and we're gonna be focused on that.
In the meantime, we've set some goals around emissions reduction related to just the technology that we're bringing to market with the OEMs and being able to execute on that, and we feel good about that. Around social, I would tell you it's been safety. You know, we are really focused around not only the safety of our employees but the driving public with all the vehicles that we have on the road. Those vehicles that are driven by Ryder, we've invested in a lot of safety technology, including, as you'll hear from Steve later, in-cab video technology that helps us be a better company and be a safer company around our drivers. We've reduced collisions between 2017 and 2021 by 78%, and a lot of that has been a result of the good work that we've done.
Finally, around governance. Listen, Ryder's been public for over 60 years. Governance is in our DNA. Governance, we have a great governance framework at the company, and it really helps to keep us focused on doing the right things. It's one of the reasons, I tell you, we've been named as one of the world's most admired companies by Fortune for the last 10 years. This is our board. You know, we are very fortunate to have a not only a very qualified but a very engaged board. This board not only takes their governance role very seriously but is very involved in our strategy and helping to shape our strategy, but just as importantly, holding us accountable to executing on the strategy.
We have four current or former CEOs of publicly traded companies. We have three former division presidents of very large publicly traded companies. We have two former CFOs of publicly traded companies, and we have a professor from one of the top business schools in the world on our board. Very fortunate to have this great and engaged board. 91%, so 10 out of 11 board members are independent. Then this is the team. This is the team that's gonna deliver. Really, this is one of the reasons I'm most excited today is for all of you to meet the team that we have. The folks in the top row are gonna be presenting later, so they're gonna introduce themselves. I do wanna just briefly introduce some of the folks that will not present today but are here today.
First, if you can stand up, Bob Fatovic, who's our Chief Legal Officer and General Counsel. Tim Fiore, who is our Chief Procurement and Supply Chain Officer. Tim is and his part-time job also is he chairs the ISM Survey Committee. If you have any questions on PMI, you can talk to Tim, and we're lucky to have him. Frank Lopez is not here today. He's our Chief Human Resources Officer. Rajeev Ravindran, who is our Chief Information Officer, and a great addition to the team back in 2018. I'm not gonna say much more about the team. I'll let you guys get to know them all, the rest of the team. I think what it's important to note is that this is the team that's delivered.
It's not a rookie team. This is a team that has a lot of experience. Although the pictures are all in little circles separated, this team works very closely together. We have a very collaborative team that really works together to make sure we're succeeding as a company. With that, I'm gonna hand it over to Steve Sensing, who runs our Supply Chain Solutions and dedicated business. He's gonna talk to you about supply chain and some of the exciting things we're doing there to accelerate growth.
All right. Good morning. It's great to be here. As Robert said, Steve Sensing. I run our Supply Chain Solutions and dedicated solutions business. Been with the company for almost 30 years. Started off in August 1st, 1992 as a frontline dispatcher.
I've been very fortunate over the years to grow up in the business. I worked in our dedicated division as well as our supply chain division. Got to learn all the new services, all the old services that we had and worked with many of the customers across the business. Also was fortunate enough to work across all the industry verticals, so automotive, CPG, retail, technology. In 2015, was appointed president of supply chain and took over dedicated just a few years back. Great to be here and great to see you all. I'll start off here today with a video, and the video will help do a couple of things. One, it'll explain some of the core services that we do.
It'll help you understand the value that we bring to our customers, and it also serves as that Ever Better national advertising campaign. We'll roll it here.
Ever Better. It's when disruption hits your supply chain, and Ryder makes you ever ready with our logistics solutions that put goods closer to you and the people who use them. Ever Flexible. With our e-commerce fulfillment network, you can reach your customers directly. Ever Innovating, so you can manufacture new products and speed them to market with our transportation services. Ever Seeing, with real-time visibility into the movement of all your goods from inbound to final delivery. Ever Moving, because your supply chain requires resilience, and your world never stops. At Ryder, Ever Better is not a tagline. It's our standard. Discover how Ryder's supply chain solutions can make you ever better.
A great commercial spot. Our teams, Karen's team, put that together during COVID. Actually launched that in May of 2020, and it'll be back out in the market on TV in Q3 of this year. I wanna hit on four key items here that you'll hear throughout the day, focused on long-term profitable growth. First of all, think about us as a port-to-door integrated logistics provider. Our customers wanna come to a company like Ryder and be able to really have a one-stop shop experience. We can do anything from offloading a container at the port to delivering the product to your end customer's home. Secondly, we have deep vertical expertise, so our teams are working hand-in-hand across those industry verticals. They often know more about those vertical supply chains than our customers do, and it's really neat.
I was out in Chicago this week with one of our big customers. To see those teams work together, the collaboration and the trust that's built, you couldn't tell who worked for who and we see that really in every example. Third, we have a foundation built on continuous improvement. Robert talked about the journey to perfect our customer supply chain. This is where that happens. You know, we've got a lean foundation, continuous improvement mindset, really focused now on building our business analytics and automation capabilities. Finally, customer-facing technology is critical. You've heard us talk over the last few years. We've continued to invest in technology and will continue to invest as a differentiator in the market. Let me give you a snapshot of supply chain. On the top left, just a couple of key statistics.
A little over 80 million sq ft of warehouse space across North America. We lease and from our partner here, Tom Havens, about 11,000 vehicles, so that's tractors, straight trucks, sprinter vans and trailers, primarily supporting our automotive and industrial business. We have over 22,000 employees. The majority of that is drivers and warehouse workers. A couple of key stats on the top right. We pierced the $2 billion operating revenue target this past year. We've basically almost doubled the business in the last five. Really key investments in our sales team, in our technology, and in our marketing campaign that's really fueled that. From an EBT standpoint, last year, we were below our target, primarily driven from the automotive sector.
I'm sure you saw in the news semiconductor shortages, part shortages, more shutdowns caused by COVID last year than expected. We also had the driver wage impact as well as the warehouse wage impact. Our team's done a lot of great work over the last nine months to fill that gap, and we will return to the high single digits in the back half of this year. Then along the bottom, as you think about port-to-door, warehousing is our biggest revenue stream, followed by dedicated. Robert talked about transportation management. That's a key enabler for us, and I would expect over the next several years for us to see e-commerce and last mile continue to grow. I wanna deep dive here a little bit for you and help you better understand some of the capabilities that we do.
In warehousing, we could operate a 1,000 sq ft critical spare part operation for a customer all the way up to 1.5 million sq ft. The majority of our warehouses are 500,000 sq ft. We've got some very large ones. Some of those highly automated, but many of them still operating kind of manual, and that's driven really from a product profile and velocity when we make those investments. The teams are focused on sustainability in these operations, so we're using LED motion-detected lighting. We're installing solar panels on warehouses. We're using electric forklifts where possible, and we also partner up with recycling companies to come in and take dunnage out and leave a green footprint.
In dedicated transportation, Steve will talk a little bit more about that, but in our business, we have typically integrated solutions where we're running shuttle operations in automotive. We're going and picking up parts in the automotive industrial sector and delivering those to the OEMs. In TM, we procure over $7 billion worth of freight, primarily truckload and less than truckload carriers and a little bit in the parcel side of the business as well. That is, as Robert said, where we act as the traffic department for our customers. We're optimizing their freight, we're planning it, and then we're ensuring the delivery to the end customer. Last mile delivery, great acquisition back in 2018. This is the big and bulky side of the business. I'll have a deep dive here in a minute on that.
The newly added e-commerce. This is where we're picking, packing, and shipping product, delivering it via parcel carriers to the end consumer's home, and this is primarily in the clothing and shoes side of the business. As I go across the top, you know, these are long-term contracts with these customers, right? Typically, a three-five year contract. We have seen over the last few years, seven-10 year deals. A lot of that driven by the automation that we're putting into the buildings. But great relationship here. Many of these relationships, some go back to the late 1980s. So we've been with them and continue to deliver on behalf of the customers. Let me focus you here on automotive industrial. Think about this as primarily inbound to manufacturing.
We have a vast network that we manage for our customers. We're working with them across thousands of suppliers, thousands of part numbers to coordinate those deliveries across North America. We're sweeping suppliers in Mexico. We're moving that through our cross-border services. We're aggregating that in what we call logistics optimization centers. In some situations, we're actually handing that part over to their employee to build the car. Very impressive there. CPG, these are big boxes, primarily food and beverage. Long relationships. Majority of this business is kinda cost plus, and we do some multi-client warehousing there as well. We did the acquisition of Midwest late last year, so that kinda gets us into that multi-client, which is a great on-ramp. Then retail.
Think about it as business-to-business and business-to-consumer. This is the omni-channel business. I think a critical piece and certainly a secular trend for us, but we're doing a lot of good things. You've got the e-com business that's in this portfolio, as well as the big and bulky last mile. A growing area for us is cross-dock to store delivery. We're taking product for retailers, and we're aggregating that and then going out and making multi-stop deliveries to the storefront. Then finally, technology and healthcare. Big piece of business for us. These are highly automated pick, pack, and ship operations. I'll give you an example here. BJC HealthCare is a hospital network in St. Louis. We just worked with them to build a highly automated distribution center warehouse.
We're actually receiving orders from their hospitals at the floor level, so from doctors and nurses, and then we pick and pack that into a tote. It's assigned to a storeroom in the hospital. It then moves on our dedicated fleet. We deliver that to the back of the hospital, and then their team goes and delivers that to the floor. It saves space. Before, they were having to order very large amounts, and they'd use that over a seven to 10 day period. Now, it's next day, they're using it, and they can, you know, use those storerooms now for a patient room if they so choose. Key takeaway here, just two years ago, 60% of our business was customers that used more than one service. Today, it's 70%. The team's been really focused on upselling and cross-selling these customers.
It builds very strong relationships that are long-lasting. Robert talked about the market. This is a huge market, $1.1 trillion. You know, typically, it's outsourced at about 15%. We have been growing over the last several years at about 10%, 10%-11% organically. The market, our competitors are growing at about 6%. Again, this continued investment in technology, continued investment in marketing and the sales team has been critical, and then certainly the operating teams executing. The secular trends, nothing new here, really this year, but it kinda sets up why we win. Again, customers wanna come and work with one company that can go from port to door. I think that's continue to be critical.
As Robert said, we are focused on North America, and I think that is a key differentiator for us. That streamlined experience from Mexico into the U.S., Or Canada into the U.S., is something that we're very proud of. Deep vertical expertise, we're gonna continue. We've got a balanced strategy across the portfolio. I think each one of the verticals are growing at very, very solid paces. Technology is gonna be a key investment area. Those four things are really what separate us from the market. I'm not gonna go into the right side, but I wanna. I think it's important for you to understand our strategy, so I'll kind of focus you on the left-hand side of the chart. Growing the base business, that's our organic focus. Massive sales teams.
We are a team sale, so it's not only sales, but it's operations, it's engineering, it's HR, it's finance that go in and work with our customers. Very, very complex. Two key enablers, Ever better, I talked about that. That has really fueled our pipeline. But RyderShare, the visibility and collaboration tool, is a differentiator in the marketplace. It has allowed us since we launched it, I guess now two years ago, it has allowed us to grow not only in the supply chain business, but in dedicated, and you'll hear more about that from Karen. I'm gonna go into a deep dive on the e-com and last mile. It's all about expansion. Then the vertical diversification is key for us.
It's not that we're moving away from auto, but we wanted to make sure that we had a more balanced portfolio, so we've really focused on CPG and retail over the last two or three years. Then I'll take you to the improved margins. You know, the team has worked tirelessly over the last nine months. You know, this wage increase hit us like everybody else. It was really a tsunami in late Q2 of last year. Our contracts, while they allowed for annual rate increases, were typically 2%-3%. We were seeing 10%, 15%, 20%, 30% pay increases in a very short window. The team's worked very hard.
We've got a couple of customers that we're still working through, but we expect again in the back half to be at that high single-digit target level. I wanted to dive in three areas: technology, our e-com business, and our last mile business. First of all, technology. If you look down the left-hand side, we buy off the shelf all of the three things there. Our warehouse management systems, our transportation management systems, which really optimize freight, and then automation and robotics. Now, on the right-hand side, it's very critical for us to have solutions that we own and develop. I think it differentiates us in the marketplace, and I'll start at the top.
RyderConnect is really an aggregator of data, so that's gathering information from our warehouses, from our dedicated fleet, from our partner carriers, and sharing that across other platforms. RyderView is a real-time visibility tool within big and bulky. I'll go deeper into that in just a minute. RyderShare, again, I can't speak highly enough of that. We're gonna continue to build that out. We've actually launched that into warehouses here in Q2, and we'll go broader in 2023 on that. Ryder e-commerce, we bought Whiplash for a number of reasons, and one of those was the technology stack. It is a differentiator in the market and will be a continued investment area for us. Three more that are more internal.
Ryder OpBox, think of that as a labor management tool and also a tool that we use to track our key performance indicators for ourselves and for our customers. RyderDrive, Steve will go into that, but that's a paperless driver app. Drivers don't like paperwork, so anything we can do to make it easier is gonna attract and retain drivers. As you think about automation and robotics, they've got to communicate with the warehouse management system. Raj's team is focused on building out our warehouse execution system. Whiplash. I'll take you really to the right-hand side of the chart now. One of the key things was the footprint that Whiplash brought. We had really instant coverage across the U.S. You notice the kind of four corners, Northwest, L.A., New Jersey area, and then the Georgia area.
We do port operations there. That gave us the ability to deliver via ground to 100% of the U.S., in two days, and then 60% in one day. Two key things, they get a scalable solution, not only from an operating platform, but also from a tech stack standpoint. The technology allows those customers to manage their inventory and their orders much easier, and they can scale. We do a lot of business with startup companies, and some that are emerging brands and then Fortune 500 companies. Some of you may know FIGS, which is in the medical industry. They're a customer of ours. They started off, you know, were a $100 million company. They're now publicly traded, and they're growing like crazy, right?
We do a lot of apparel and footwear here on this side of the business. Ryder Last Mile, great acquisition. You know, couldn't be happier or more pleased with it. This is where we're delivering furniture. You could be a manufacturer, you could be a retailer, exercise equipment, or bedding. It's big and bulky items that you may not have a truck to haul it home, or you may not, you know, be able to get it to your house due to the weight of it. Our teams go in and do that, usually two individuals in a straight truck making that delivery. Again, great tech stack.
We've invested heavily into RyderView 2.0, and that's where it allows you to schedule your appointment, adjust that appointment if it's en route, and you're maybe not home in time. You can do that, and it's been received very well in the market as we launched that late last year. Four key service areas in the bottom. First, over the threshold, we can deliver it through your front door or all the way to the right, deluxe services. If you order a new dining room table, we might assemble that in our warehouse, or we may do it in your room of choice. Our teams will then take any returns that you might have and dispose of any damage in the room.
Key thing for us here, continue to grow at double-digit top line, and the earnings are in line with our high single-digit target range. I'll leave you with a couple of slides here. Robert talked about it. We're raising to low double-digit top-line growth. Team is well-positioned. Pipeline remains strong, and we will be back at high single digits here in the back half of the year from an earnings standpoint. The four items I started with, think about us as port-to-door integrated logistics. We're one of the best in North America and we'll continue to grow that. Our people, deep vertical expertise. Key at building trust and building those collaborative relationships, and then continuous improvement. Our team's striving to perfect the supply chains of our customers. Finally, investments in technology.
We have to stay ahead of the market, so the team's focused on that, and we're gonna continue to invest as we go forward. Great to see you all. With that, I'm gonna pass it off to Mr. Steve Martin, our Senior Vice President of Dedicated Transportation.
Thank you. Well, good morning, everyone. Steve Martin. I lead our Dedicated Transportation Solutions group. I started with Ryder as a frontline operations supervisor in Dedicated. I've had the opportunity to work across supply chain and the dedicated teams in a number of different positions, operations, sales. I actually led our engineering, quality, and implementation team, supporting both supply chain and Dedicated for a period of time. I'm back in this role, leading the team, and excited to be here.
I've been on the forefront of change throughout my career at Ryder, but I haven't seen change happening at this rapid pace in transportation in the 34 years that I've been with Ryder. I'm gonna walk you through a few things about where we are.
How we're looking at the change and where we're gonna be going. I'll start with a couple key messages here. You know, our goal is to really capture significant growth profitably and improve our earnings. Driving operational efficiencies. Critical in our business is safety. You've heard Robert and Steve both talk about it, but really taking the importance of safety in what we do for our employees, and what we do in the communities that we serve, and how that drives operational efficiencies as well, along with the digitization, and I'll talk a lot about what we're doing from technology and how that's really improving what we do and how we do it. Focusing on growth. Not only growth, but where and how we want to grow.
Looking at our business and thinking about density and thinking about the cross-selling opportunities we have across our segments. Then really focusing again on differentiating our value with our customers by bundling services and looking at our full range of transportation management, brokerage, and dedicated, and how can we move customers' freight for them, not just on dedicated, but with third-party carriers as well. Let me give you a snapshot of dedicated. You know, dedicated is really the first natural extension of a full-service lease or choice lease customer to continue outsourcing. By us adding drivers, management, and technology, we enable them to move their private fleet to a dedicated solution but maintain that private fleet brand in the marketplace. Gives them an opportunity to improve their competitiveness and reduce their risk.
We do this today with about 11,000 vehicles, 6,000 drivers, and across 500 locations in the U.S. In 2021, we ended the year with $1.1 billion in operating revenue and earnings of 4.7%, well below our targets, and I'm gonna talk about how we're bringing those targets back to or our earnings back to our target high single digits. You know, one of the strengths of dedicated is our customer base. We have 94% retention, which is really good in this industry. That includes businesses that were underperforming that we choose to exit. We have 50% of our business last year was sold from upselling or cross-selling, so really the power of working with FMS and working with supply chain and that relationship with the customer. 9% growth in customer count last year.
These are new names that we added to our portfolio, and 50% of those were private fleet conversions. Again, a real focus of the team is on that private fleet market. You'll see a well-balanced and diverse customer base across the industry segments there on the right. You know, if you look at the top four, industrial about 22%, retail 21%, CPG and metals at 14%. Gives us a very well-balanced group of customers in a number of different industries. I'd like to spend just a moment walking you through a couple of those and telling you what we do. With Shell, we provide flatbed and logistics services supporting their business of very safety-sensitive freight.
With True Value and Hill's, we have over 500 drivers supporting direct-to-store or direct-to-veterinary clinics and office delivery of their products, so our drivers being really representing the brands to their end customers. We do this across about 50,000 deliveries with those 500 drivers in any given week. Del Monte is a direct DC-to-DC dedicated operation, so less handling, less specific, but really high service, high commitment to the movement of their freight moving out of manufacturing or out of DCs to a DC. Alro Steel, this is a large metal service industry company that supports metal fabrication across 12 states. We've got about 380-400 drivers that support this business, and this is very high high-volume, multi-stop delivery on flatbed.
When I say multi-stop, we're doing up to 20 stops a day. Our drivers are delivering anywhere from a mom-and-pop type operation that may be doing custom stainless steel kitchen fabrication, all the way up to large manufacturing facilities of time-sensitive metals moving into to their process. Very complicated, different types of materials and handling. You'll see a little bit of that here in a video in a moment. As Robert pointed out, the market here for dedicated is pretty significant. $400 billion in an addressable outsourcing market, and these are primarily private fleets.
The opportunity for us based on the investments that Ryder is making to address the secular trends really gives us a great opportunity to grow in that segment where these customers may not be able to make the same level of investments. They may wanna take their capital and apply it to their core business as the driver shortage, the equipment, and the safety regulations really drive up the type of investments you need to be competitive in this space. Why we win, and really thinking about that addressable market. I'll walk you through four things here. Technology and engineering. You've heard about RyderShare. This is absolutely a differentiator in our market. Last year, we had specific customers call out during competitive bid situations that this stood us apart from our competition. Everybody has visibility in Dedicated today.
What this allows us to do is really build a collaborative conversation with the customer, and I'll walk you through how we're tying other pieces of our technology together, but it really is one of the strengths of why we win. Along with our engineers, we've got 100 engineers specifically in Dedicated that are focused on taking the data from our analytics, from our telematics, and helping customers drive continuous improvement. Our driver excellence. I think our drivers are best in the industry. You're gonna see that, just in a moment here in a short video. Those drivers are supported by a very strong recruiting team.
We recruit broadly across the U.S., but we've got very targeted recruiting efforts with women in trucking, troops in transport, so looking at the military and really being able to build the right pipeline of professional, qualified drivers to come in and work and support our customers. Operational expertise, again, goes without saying in Dedicated. We've got to be very good at what we do, and we are. We've got industry-leading safety programs and really high service on-time performance. From a fleet management standpoint, the strength of us being able to leverage our FMS team, not only for availability of equipment when we win new business, but being able to scale up and ramp up for surges by tapping into our rental fleet, and then, obviously, the support we get from an uptime from a maintenance perspective.
I want to take just a pause here and show you a video of our drivers. This is one of the most critical piece of what we do. They're really our representative not only to our customer, but to our customer's customer. What you're gonna see in this video is the partnership of our driver and our customers, the mutual respect and appreciation they have for each other, and the things that the drivers are doing relative to the day-to-day representative of our customer brands.
Carlos is an exceptional individual, and in the way that we would look for that person of character when we look for a potential candidate within CVS, Ryder does the same thing. They found a true gem in Carlos.
We need to be there on time. We need to be there with a good attitude and help out as much as possible, so we go above and beyond and help them out. By the time that I leave each one of my stores, I can see a good smile on their face.
The reliability of Ryder and the relationship that we have with them has been very good. We started in 1998 with the RRL, so we're over 20 years now. A guy like Kevin, especially, I've known him for over 20 years. In my mind, when he goes out, it's seamless. He takes care of the customer. He makes the right decisions. I don't really worry about Kevin being out, taking care of business for us every day 'cause I know it's gonna be done correctly.
You know, right now, our truck drivers are burdens lighter people. They go to our customers. They know our customer, you know, and they do all the things. They're interacting between the two. The one concern I had, how would Ryder truck drivers react to that? Well, I found out that once you start doing business with Ryder, and they pick out truck drivers for you, and literally they hire them, and we train them, they become burdens lighter people. You talk to our truck drivers today, I mean, they'll tell you. I mean, the first thing is they know us. They know the president. They know myself. The plants that we deliver product to, literally, we were getting compliments that, you know, "Your new truck drivers are fantastic people." Because all they wanted to do was please.
I just like doing a good job for whoever I work for. I like to do it. I wanna do it right as much as I can. I want it to be safe. I wanna get the product there on time and in good condition, of course. I like working for all of our customers.
I think you can get a short or small feel for how critical that driver is to what we do. They really are the ones that are facing our customer's customer. So we put a lot of effort into training and supporting them. I'd like to shift and talk a little bit more on a forward-looking basis about our strategic initiatives and how we're accelerating growth and expanding our margins. We really have three areas. Top-line growth, invest in technology, and improve margins.
I'm gonna cover the first two in a moment here, but let me zero in on margins. You know, last year, we ended at 4.7%, so certainly not where we wanna be. We wanna move to that high single digits. As Robert mentioned, one of the things that we started in 2021 as we saw the labor market shift rapidly is start to work on converting our contracts to better insulate us from wage variability. So we're doing this by setting more annual rate increases that are automatic. We're working on indexes that are closer tied to our industry, so really focused on driver wages versus an overall CPI index and how we can better index that with our customers so we're able to have the type of triggers that allow us to move pricing as the market moves.
We're also focused on density, and recognizing how density can drive not only operational efficiencies, but a differentiated pricing strategy. When we think about servicing one region over another, or if we look at our service levels and how can we use pricing to better affect improved margins. Centralizing and digitizing our work. We've already done a lot of work in terms of digitizing the activity. We did a lot of work over the last few years of centralizing some back office activity. Taking billing and payroll out of the 500 field locations and bringing those into two or three central operations.
That's enabled us to take work, administrative work, off of our frontline employees, giving them more time with the drivers, more time with our customers, which is really the benefits that we get as a return there are higher retention 'cause we're interacting with our employees on a daily basis with more time, and interacting with our customers and understanding their business, how can we improve service, how can we drive continuous improvement, and how can we expand in other areas? Really helping our front lines from a capacity standpoint through that effort. Setting the top-line growth or sustaining that over the cycle. Dedicated has had a lumpy sales history. We go through kind of highs and lows in sales. Our focus is on how do we sustain growth over the cycle.
I'll talk about two parts of this. Really on the left-hand side, focusing on how we drive across all of Ryder the value of being able to sell. Focusing on private fleet conversions, expanding our sales reach across all of our teams. Last year, we started Ryder Sales University with a specific focus on how do we train all of the sales team on being able to identify opportunities and be able to progress those opportunities forward. Talked about RyderShare as a differentiator, density areas, and then really the Ever Better campaign. We saw a tremendous amount of new pipeline and activity come through, and we're looking for that in the back half of this year. On the right-hand side, organically growing brokerage. Brokerage has two really values in Dedicated.
About one-third of our current customers use brokerage today, so helping them move all of their freight either on dedicated or through a third-party brokerage solution, or helping us fill empty miles for a dedicated operation so that we can improve continuous improvement, drive down cost, not only for our operation, but for our customer operations. In addition to that, as we grow brokerage, we have many more touch points with customers to build a relationship. We have many more opportunities to understand where freight is moving and how it's moving through their network, and being able to proactively develop solutions for them to upsell into Dedicated. The other area strategically that we're working on is investing in technology. I'm gonna move from the left to the right here. Spend a little bit of time on RyderDrive.
RyderDrive is our driver application that allows our drivers to not only do their hours of service with electronic logging device, but we added trip management to that same device, so that we could automate the entire process of a driver's daily work. It allows us to take orders electronically from a customer, pass it down to the handheld or an iPad. The drivers can complete their work and providing a proof of delivery, exception management pictures, really whatever the customer's requirements are for that point of delivery with their customer electronically. All of that enables that visibility up through RyderShare. Customers are able to use RyderShare as the portal to then see what's happening in their business, and we can complete that activity electronically.
As I mentioned earlier, that is the driver for us being able to pull work out of our front lines, administrative work, now that we've been able to do that digitally. Previous to that, our frontline people were taking large stacks of paper and having to either key punch or scan that data in for payroll and billing. Now it's all electronic, as well as giving that customer value in additional proof of delivery and signature capture. Business intelligence, if I jump over RyderShare for just a second here. Business intelligence is a way for us to build trust and transparency with our customers. By taking that data and being able to present it back to them in dashboards or active reporting of data relative to stop time performance is a good example.
Customers may not have known where delays were happening in their supply chain. We can now show them specifically where it's happening, what day, what time, what customer, and we can all work on continuous improvement. That has an impact on driver capacity, has an impact on cost, and obviously service. We're also using business intelligence to help us from a driver retention standpoint. When you look across a driver's work week, they may not have a level work week. Orders don't come in in a level way, which impacts their compensation. We're able to use this with our customers to have a much more rich and active dialogue about how the supply chain could change to impact that individual.
If we can impact it positively, we can retain that individual over time, and given the driver shortage, it's a key focus that we have in the business. In-cab technology. We talk about safety and the importance there. I said we have an industry-leading safety program, and I absolutely believe that. We can prove that through data, that if you look at the overall value of being able to see into the cab now with this camera technology, our frontline supervisors are able to coach safety behavior performance. As Robert pointed out, and we have on the slide here, that's really given us this lift of 78% improvement in collisions from the start of that program.
I'd like to wrap up here, with just two slides. We are committed to long-term targets of high single-digit growth and high single-digit earnings as a % of that operating revenue, and we are on track to do that through the back half of 2022. Key takeaways I hope you have from the slides that I've shared with you here is that we are positioned well to capture growth and to do that profitably. That we are driving operational efficiencies and really using the technology not only for automating and removing tasks and helping improve operational efficiencies, but how we're using technology to drive safety and improve safety. Our focus on growth, density, and working across all of our selling opportunities across our segments, and then differentiating our business model.
Really working with customers about how we can understand where their freight is moving and how we can move their freight, whether it's on dedicated, transportation management, or brokerage, and bundling that into a value solution. I'd like now to ask Robert and Steve and Bob to come up. We're gonna have a short Q&A session.
You got it.
Okay, great. We're gonna take about 20 minutes of questions both from in the room and virtually. I'll keep an eye on those for those who are listening in would like to type in a question. We've got Robert and Juan with mics. I would ask if you would please wait till you get the mic. Robert, there's one over there to be sure that everybody on the webcast can hear your question. We'll start with Todd.
Great. Is this on? Can you hear me okay?
Yes.
Good. Okay. All right. It's just like being on zoom.
You're on mute. You're on mute.
We're in person. Okay. All right. Thank you guys for hosting the Analyst Day. A lot of helpful information, and you know, I think it's helpful also to have that core earnings metric that's out there to give us kind of an anchor on that bridge. Robert, I guess to start, you know, can you talk about what's really changed in the market to support the pricing initiatives that you have? You know, the ability, it really seems like that you're pushing more price and kind of, you know, leaving more residual risk, you know, on the side. How is the market really positioned to accept the pricing that you're working through with the new arrangements?
Look, that's a great question, Todd. I think that the key differences is really the things we talked about on the secular trends, right? The fact that maintaining a fleet of trucks has gotten much more difficult than it used to be. The volatility of the used truck market over the last couple cycles. Any company that has run their own fleet and had to deal with that, on their own has struggled with that, I think, over the last couple cycles. The value that we bring by being able to manage that fleet, being able to retail those used trucks in through our used truck center, is being recognized by the market. I think as we've gone back and adjusted our pricing to reflect that, we're seeing the market acceptance to it.
I think it's the fact that everything we do has gotten harder, and companies are recognizing and willing to pay more of a premium for that. Whether it's on the FMS side for the truck lease or on the dedicated side for the managing of drivers and the managing of a private fleet to the more complex stuff we do on the supply chain logistics side.
Got it. Okay, if I could, maybe just one follow-up.
I think you've been asked this before, but on the $75 million-$100 million kind of normalized gains level, can you help us just understand why that's the right level of normalized gains, you know, over the course of, you know, a cycle, and why it wouldn't be below that or why it really wouldn't be above that? How you kind of drive that number.
I'll answer it briefly, but I don't wanna steal John's thunder. John, in his presentation, will give you a lot more detail around used truck prices in the historical 22-year look versus where we are today. But as you'll see there, what we've done is we've estimated over the cycle where it would go back to, and that's what we came up with the 75 to 100, kinda gives you an average of where it's been. But you'll see where we have our residual value set versus where used truck prices have been over the last two decades. We're really on the low end, more closer to the trough level. You'd have to really get down to historical trough points to get to the point where we'd have no gains.
Okay. Thank you.
Okay.
Thanks, Todd. I think we have one here in the front. Brian.
Okay. Thanks very much. Brian Ossenbeck from J.P. Morgan. One quick one for each of you. Robert, I know you probably don't have much more to say, but just to make sure we ask the question anyway, on HG Vora, if you can, any response or any commentary from them after you gave them the decision of the board?
No. I mean, look, I don't have anything else to add other than, you know, they're still an important shareholder. They hold 10% of the stock. We're gonna obviously continue to have dialogue with them as a shareholder. Yeah, that's all I had on that issue.
Okay. Steve Sensing, when you look at the business, and obviously you've done some good acquisitions here recently, there's been a lot of activity in the market for warehousing, for downstream logistics from other maybe players who haven't been in that space in the past. Maybe you can talk about the competitive landscape, both just from an operational perspective and also for sourcing of new deals and what you might be seeing to add in your portfolio.
We've got, I think, a very disciplined process that we go through. Actually, John and I and Steve are on the phone every week going through a pretty long list of opportunities. We're primarily looking in three areas, right? New services and capabilities that we don't have, new geographies that we may wanna move into across the U.S., or North America, and then finally, if we can get into a new vertical or new customer base.
Lastly, Steve Martin, you mentioned a couple times density and building density in the system. If you can maybe elaborate on that, make sure we understand what that means and what are the prerequisites to get there. Ultimately, what is the goal to adding. I mean, it sounds good, but what else are you looking to add? Is this more multi-stops, you know, more customers on the same routes? What do you see the main beneficiary as going that route? Thank you.
Okay. When we look at density, we're looking across those 500 locations, and they are clustered in about 26, primarily around 26+ locations in the United States. How can we take more advantage of sharing across those locations? How can we look at it in terms of the selling and focusing on those geographies and sell more into those geographies? Because the in dedicated, one of the primary service obligations is guaranteeing that we're gonna move a customer's loads. Having that contingency model focused on a region, it gives us the power to lift our earnings.
Great. Thanks. I think there was a question in the back row there, Robert.
Yeah. Hi, good morning. Allison Poliniak with Wells Fargo. On supply chain services, that incremental raise on the core growth, that low double digit, is there a way to understand or break that down for us? What's contributing to that? Is it new market penetration, or is this a specific vertical in that group starting to grow faster for you? Just any clue there?
No, I think it's, you know, really all the verticals are growing at a very solid pace. You know, some high single, some a little bit higher than, you know, maybe 12%. It really is on the back of three things that we've talked about. The technology from a differentiator standpoint. You know, certainly RyderShare is a key differentiator. The marketing campaign has contributed an increased awareness of who we are. I think just, as Robert said, you know, the impact of supply chains over the last two years has really caused companies to come to companies like us, because we have bandwidth and the capability to do pop-up fleets, open up new warehouses much quicker than they can.
Understood. Robert, you talked about, you know, the shift in the portfolio over time with supply chain and dedicated. Is there an optimal mix that you think about in terms of that, in the context of that sustained return target in the high teens that you're looking for?
There really isn't a target. I mean, we just know that the earnings coming from the asset light business, we wanna have more of that. We're gonna continue to grow that. Obviously, the market also dictates some of it, how much of it can we grow over time. Our goal is to continue to inch that up and continue to move it up, where it keeps. If you think about moving or growing supply chain, low double-digit, dedicated high single-digit, and our truck leasing, our FMS business, we're growing at mid-single-digit. The math will tell you over time, it continues to just be a slightly bigger part each year of the business.
Great. Thank you.
Go over here to Bert.
Yeah. Thanks. Bert Subin with Stifel. Steve, to follow up to your comments on dedicated margins being in the high single digits over time, you have public peers that do double digits in that business, and it would seem like just having your FMS segment would be an advantage relative to what other peers have. Should we expect that ultimately you get to double digits there?
Long term, we're focused on the high single digits. As we build out that differentiated bundle of transportation services, 'cause I think when you look at some of those others, they have a different bundle. So as we build out in that bundle, we're gonna see our earnings move toward that high single digits. Yeah. I think the key, I'll just add to what Steve said. If you look at some of those firms out there who are at the double-digit range, a lot of it is some of the things that Steve talked about, this density. Having the density in the areas to be able to leverage a dedicated fleet across different operations, I think is a key to getting there.
That's one of the things we wanna get to that high single digit, and then the longer term as we look to build that density, I think that's the opportunity to maybe get to those levels.
Just a follow-up for you, Robert. You may not have a comment, but just to follow up to the question on HG Vora offer, can you just walk us through how you determined that, you know, the value inherent in the company is greater, or do you not have a comment on that right now?
No, I mean, other than what you saw too, you know, what you're seeing today, obviously the board gets a little bit more detail than that, but they're looking at the plan, and they're looking at the work we're doing and the progress we're making, and comparing it to the price that was in the letter. So it's that simple.
Great. There's one in the back corner there.
Hi, Jordan Alliger at Goldman Sachs. Just a couple things. On supply chain, can you talk a little bit about what are customers asking for demanding the most now from a service standpoint? Do you see any sort of shifts in what the customer may need over the next several years? Does it tie into maybe reshoring or nearshoring opportunities? Secondly, once you hit that high single digit EBT% in supply chain, you know, let's say in the back half of the year, you know, what are the key one or two things to keep that level sustained, you know, over the course of a cycle instead of seeing that variability we've seen in the past? Thanks.
Yeah. I think we've seen a pretty balanced growth from a service standpoint. You know, certainly e-com, I think is gonna continue to grow post-acquisition. Big and bulky piece, again, growing at solid double-digit numbers. I think, again, those are really kinda tied to the omni-channel capabilities. It's been pretty balanced, you know, across the portfolio. From an earnings standpoint, you know, the automotive piece, we've restructured the majority of our contracts in that space to help mitigate the impact of plant shutdowns. That's, you know, that's a big piece of business. They're always gonna have model changes and things like that that happen throughout, you know, the years. I think we should be in pretty good shape to maintain that as we go forward.
Yeah, yeah, the one thing I would add to that is automotive logistics hubs. We've been in that business for a long time, and has been over the years a relatively steady business, right? You generate. You're in the U.S., we're gonna build between 14 million and 17 million cars and trucks each year. What's happened over the last year is really a big anomaly, right? That all the plants in North America be shut down for six weeks and then ramp up and have the issues we've had with semiconductors. I do think we will get past this, and even as we transition to electric, I think that it goes back to being more of a steady assembly and production count.
I think there's a question in the front row with Garrett here.
Sure.
Garrett Holland with Baird. Thanks for having us today, and I appreciate all the detail. First, a question on, you know, what you're seeing from your customer base. Some concerns out there about pricing and demand. Are you seeing that across all the end markets that you serve? On the supply chain side, how does the M&A strategy really accelerate what you're trying to do there from a growth and return perspective?
First I'll tell you what we're hearing from our customers, maybe if we're trying to get a view of what's going on in the economy. You know, people sometimes look at Ryder as the canary in the coal mine in the economy because of all the things we touch and the canary has really typically been rental, right? Because rental is reflective of there's a spike in demand, and people need to go out and rent trucks and when it slows down, those are the trucks that come back first. I can tell you, rental is still extremely tight, so we're seeing customers still with a very high demand for additional vehicles to move their products, and I think that's probably the best indicator in terms of you know, the capacity to handle it. It's still very tight.
You still have a lot more demand to move freight than you have trucks that can move them. I'll let you handle that.
Yeah. I would say on the acquisition front, it's really around services and capabilities. Ones that we don't have today, I think those will be the biggest movers. You know, you look back to big and bulky, that was, you know, mid-hundreds. You know, the recent one with Whiplash was a pretty large acquisition for us, so we're keenly focused on it. It's part of our strategy, so don't really wanna talk specifically about there, but we've got, you know, two or three items we're looking at.
Okay. Jeff. Get the mic over there.
I'll pick it up. Thanks. I'll be the guy that shows up 90 minutes late and asks a question.
I would expect nothing less.
I wanna focus away from short-term. You know, we're on the cusp of probably some of the biggest changes this industry's ever seen over the next five-10 years, whether it's the type of propulsion being used in the trucks to cleaner vehicles. This ESG move is really accelerating, and customers are looking at, say, Scope 3 in the supply chain. We're on the verge of autonomous driving technology. You know, we talk about nearshoring, and it was, oh, well, supply chain issues, we gotta nearshore. Now it's geopolitical issues, and we're starting to see an acceleration in the nearshoring. When you look at the combination of these things, it's gonna be a different warehouse footprint. You're gonna need different capabilities on maintenance, things like that.
When you look at where the puck is going over the next five-10 years, you've got an edge today on kind of the short-term things. Can you talk a little bit about the longer term and what capabilities you need that you don't have today? Are you gonna have to use your balance sheet to be able to shoulder all these hydrogen vehicles or battery electric vehicles on the leases for customers? What do you have to do, and what kind of investments do you have to make in terms of where you think we are five years from now, 10 years from now?
You know.
Let me jump in. I'm being told that the mics are not transmitting to the folks in the audience, so if I could ask you to kind of paraphrase.
Okay. All right.
The question in your response.
Well, first of all, great question. Yeah, I think Jeff's question is more around the long term, all the potential disruption that we're gonna see in this industry. How is Ryder positioned to deal with that, and what are the things we think we're gonna need to do differently in order to adjust to that? We're getting a little bit ahead of Karen's presentation 'cause that's exactly what she's gonna talk about, and it's one of the things we're really excited about at Ryder. I think, look, change is good in our business, and anything that makes our business more difficult is typically a good thing for us 'cause companies are gonna look to companies like Ryder to help guide us through this. But first I would tell you around truck technology, clearly there's a lot of questions about electric. When does electric happen?
Is hydrogen fuel cell an option? When does that happen? What are the economics of making that work? We're all over that, and Karen's gonna talk a little bit about some of the things we're doing there. Autonomous. I think Ryder is very well positioned, as you'll hear from Karen, to run an autonomous truck network, so we're partnering very closely with some of these technology companies that are developing the technology. They're great at the technology, but they're not fleet operators. So who's the company that can really come in and manage that fleet, do the final mile delivery, have the hub network almost in place already, and be able to do all the maintenance on the vehicle? That is right in our sweet spot.
You know, there's things that we can leverage from our current capabilities, and then there's new learnings we're gonna have to work on, right? The maintenance on an electric vehicle is gonna be very different. We're gonna need to work on that transition over time. You know, again, Karen will talk about this. This is something that's gonna take, I think, decades. It isn't gonna happen overnight, and that transition period is gonna. Companies are gonna really need a lot of help through, and how do they prepare the infrastructure? How do I manage fleets with two different types of technologies? I think we're very well positioned there. The rest of it is really around the work we've done on acquisitions, e-commerce, last mile delivery.
That's, you know, that's gonna be big in continuing into the future. We have RyderVentures, and she's Karen's gonna talk a little bit more about what we're doing there. You know, that's something Ryder would have never done 20 years ago. Why would we be a venture capital, you know, firm? The truth is, that's how we keep our finger on the pulse of what's going on, and we are the eyes and ears for our customers. What are those new technologies out there that we can bring to our customers that become the services that we may provide them in the future?
Any other questions? Nope. Okay, seeing none, we'll go to break for 10 minutes. Thank you very much.
Thank you.
All right, we're gonna get started if you wouldn't mind taking your seats. Give everybody outside a minute to come in. Gotta round up my boss, Mr. Diez. Rebecca, would you mind asking the folks out there to come on in? All right, we're getting ready to start the second part of the morning here. Our first speaker is gonna be Tom Havens, who runs the fleet management business. Tom?
Thank you, Bob.
Good morning, everyone, and thank you all for coming. Just to introduce myself, my name's Tom Havens. I've been with Ryder for about almost 29 years now. I started almost the same time as Robert did. I started on our rental counter in San Diego, California. I'm a product of our rental manager trainee program. Like many of our managers today that come through the manager trainee program, I've done many different roles throughout the organization and in different functions. I've managed in rental, obviously, I've managed in asset management, I've run our used vehicle sales organization. I was a general manager for a bit of time up in Canada. I was our chief of operations before the position I'm in today as president. That's a little bit about myself.
Really just three key messages I wanna get across today. First is that we're really well-positioned to capitalize on the secular trends driving outsourcing in a large addressable market. We've got two key initiatives with our pricing initiatives and operational excellence that are gonna enhance returns going forward. We're well prepared to manage through the freight cycle. Those are the three key points I wanna get across today. Just a little bit about FMS and what we do. We're about a $5 billion operating revenue company. We have about 11,500 employees. Our most important employee is our technician. We have about 5,000 technicians, and we manage about 240,000 vehicles at about 750 locations across North America.
Our key products, Robert talked a little bit about them already, but I'll hit them again. Our ChoiceLease product is our largest product, it's about 65% of our revenues. Here is when Ryder owns the asset, and then we wrap a maintenance package around that asset. There's really three types of flavors with maintenance that we put. First is a full service package, where all of the maintenance is included in one price on the vehicle. Second is preventive, where we provide preventive maintenance that's included, and then everything else is pay-as-you-go. Then we have an on-demand product where all the maintenance is paid as you go. So three flavors of ChoiceLease. We have SelectCare.
Really the difference with SelectCare is that the customer owns the asset, but we wrap a maintenance package around it with those same three options of full service, preventive, or on-demand. Of course, we have the commercial rental vehicle market, which is probably the most familiar product that we have in FMS, where customers come to us for spikes in demand, et cetera, or short-term needs in rental. It's important to note that our rental business is a B2B business. Very little consumer business at all. We do mostly B2B. We have other fleet support services like fueling, safety services. We provide emergency roadside assistance for our customers as well.
Robert mentioned this as well, but we're one of the largest retailers of used trucks in North America, so we have a large network where we dispose of our assets through our used vehicle sales network. The purpose of this slide is just to say we have a very diversified customer base and diversified customer portfolio. We have about 14,000 contractual customers across North America, and we do business with companies of all different sizes and all different industries. Some of the largest Fortune 500 companies that are national accounts with us do business across North America to a local one- and two-truck business that's a mom and pop, if you will, delivering in the local community.
It spans all types of industries, all types of customers, and not one customer is greater than 1% of the overall portfolio. Really diversified customer base and very diversified fleets that we deal with. You've seen this slide, but it's a very large addressable market for us, about $60 billion. Only 25% of that market is currently outsourced. We've been in business 90 years doing this, so there's still 75% of the market that's out there as do-it-yourselfers. That's an opportunity for us. Although we have some really strong competitors in the marketplace, we view our biggest competitor as the do-it-yourselfer and those owners that we're trying to convert to our products and services, and like I said, that's 75% of the marketplace.
We believe we're really well-positioned to capture the growth from that 75% of, because of the cost and complexity that we're seeing in the market today, that technician shortage, that we're seeing and some of the labor shortages. In terms of government regulations, there's still a lot of uncertainty out there. All of that complexity, although is difficult to manage through, we're well-positioned to manage through that complexity, and that's why companies come to us to do business to solve those problems for them. Really, why we win? Why we win is about the total cost of ownership model and providing value in that total cost of ownership model. First is around the network scale.
Now, we're one of the largest purchasers of new OEM equipment in North America, so we have procurement leverage there. We have this large 750 shop network that is really not repeatable from competitors. Because of our buying power, we not only buy the vehicles, we also have procurement leverage on parts, and we have that leverage that we can pass through to our customers and that value. We also have deep maintenance expertise with our 5,000 or so expert technicians. We have very streamlined processes in our shops, and we're able to maintain vehicles at a lower price than does ownership, and that obviously provides value to those customers. From a risk mitigation standpoint, we offer a guaranteed maintenance program.
That maintenance risk that ownership company might have, they can shed that risk to us. We maintain the vehicle at a guaranteed price. Then, of course, we have a very large used vehicle sales network, as I mentioned. We're able to retail those vehicles. Because we're able to retail those vehicles, we can maintain a higher residual value versus ownership as well. When you kinda package those up, those three things in terms of procurement leverage, maintenance expertise, and the shedding of risk, we're able to provide a package to customers that's at a much lower cost of ownership and bring those do-it-yourselfers to Ryder. From a strategic initiatives perspective, we're really working on four key things in FMS. One is in terms of pricing.
I'll talk in detail about the pricing, our enhanced asset management capabilities, operational excellence, and then innovation. From a pricing perspective, we've implemented strategies both in our lease and in our rental product lines, to really focus on segmenting the different pieces of the market and ensuring that we're getting appropriate returns across all the markets that we serve. From an asset management perspective, really focusing our efforts on understanding the different cycle and ensuring that we lessen the impact of that cycle in the business based on the decisions that we're making today. From an operations perspective, we've implemented a transformation across our business, which I'll share some details for you on that. From an innovation perspective, we've executed on new products and services like COOP.
We understand that EV and AV are going to be part of our future as we move forward, and we're well prepared to deliver in those marketplaces when they do become more part of our business in the future. Karen's gonna be covering those later in her presentation. I'm gonna go into detail about the first three, price segmentation, asset management, and operational excellence. From a lease pricing perspective, this was really a price segmentation strategy, and we've been working on this for a couple of years now. If you think about the types of customers, who they're delivering to, the applications that they're in, the specifications that they have on the vehicles, really our history with those customers.
We've been able to build out a really detailed segmentation model to ensure that the pricing that we're offering in the marketplace not only adds value to the customer but also ensures that we get an appropriate return on all those assets that we're pricing going forward through that segmentation model. Now, we rolled this out in 2018, and as we've mentioned, we've executed about 40% of the lease fleet has turned over at this point. It's delivered about $45 million in benefits so far from those initiatives. We've also, as I think everybody knows, delivery times have been elongated to as long as 12 months.
We've actually sold another about 20% of the portfolio already, so about 60% of the portfolio is sold, but not yet delivered. We still have about 12 months of deliveries that are gonna show up, and we expect, obviously, that we'll complete this in about 2025 because our average lease is six-seven years, so it takes time to work through the entire portfolio with that new pricing methodology. We're expecting to grow the lease fleet at about 2,000-4,000 units a year as we move forward, given our capital allocation strategy. We're growing at about 2,000-4,000 units, and we wanna focus that growth capital on the truck segments, which historically have given us a higher return.
We expect to obviously grow in those truck segments like e-commerce, etc. Like I said, when we finish this up in 2025, we think this is gonna deliver about $125 million in improved earnings for us. All right. From an asset management playbook, we do understand that our non-contractual products, like rental and used vehicle sales, are impacted by freight cycles. We wanted to really address that here with this playbook. We've mentioned it earlier, and there are already a couple of questions about it, but the setting of our residual value is at a historical low.
Then also incorporating a cyclical forecast into those residual value estimates going forward is gonna be very important for us and help really lessen the impact during a down cycle. Put us in a position where it's very unlikely that we'll see losses in FMS because of those changes that we made in those policies. That's a key part of this strategy. When you look across our portfolio of business and our contracts, and we've forecasted, and I think most of the industry's forecasted that the downturn will largely be in the 2024 timeframe.
We're making decisions today in terms of contracts that we're selling, on those expirations, on the expiration dates of those contracts to try to avoid that down period in 2024 as best we can. As we're negotiating deals and doing business today and signing new contracts, trying to limit the expirations in that 2024 period. We can't get them all, obviously. But to the extent we can minimize that impact in 2024, will obviously help us with our proceeds per unit, going forward. In what we've done in used vehicle sales, I know we've talked about it on previous earnings calls, but I'm gonna get into a separate slide specific to that.
We've built out a new network in used vehicle sales, and what we're trying to do is walk into the weakening period with the lowest inventory that we've ever had. Today, we're sitting on some of the lowest inventory we've ever had, and we wanna walk into a downturn with a low inventory level. That'll help us manage through this as well. Let me jump into used vehicle sales, give you a little bit more detail because this is also a big part of our strategy. Really what we wanted to do here is ensure that we reached as many retail buyers as we could. Retail buyers generally give us about 30% higher proceeds than do wholesale buyers or other channels. We wanna try to reach more retail buyers.
We wanted to do this in two ways. First, just growing the capacity of our overall network. Today, we have 63 retail locations across North America. We've added 12 since 2019, if you think about that as a baseline, which is gonna give us about 20% increase in the capacity to sell more retail. More and more business is being conducted online, so we've invested in digital channels and built out an inside sales team that is also gonna reach more retail buyers and increase our overall capacity by another 30%. When you think about what we can sell retail going forward versus a 2018, 2019 baseline, we're able to reach about 50% more retail buyers and retail capacity through this new network that we've built out.
That's gonna be important going forward, not only to increase proceeds per unit, but we did have strong sales when you look back at the end of the 2019, so we knew we were gonna need to sell more vehicles through the network in the coming years, and this is gonna allow us to do that. We think by executing on this strategy, that we're gonna be able to increase proceeds per unit across all the vehicles we sell about 8%. I wanna take a couple minutes to just go through the shop transformation and operations transformation that we delivered. We started this project back in 2018, and we had two issues that we wanted to solve.
One, we started to see our total maintenance cost increase, so we targeted an 8%-10% reduction in our overall maintenance cost across the business. We mentioned that we spend about $1.2 billion-$1.3 billion, so 8%-10%'s a big number to go target. That's where the $100 million target came from. Secondarily, even before COVID started, we were starting to see the labor challenges, so we knew we needed to get more productive and try to solve that problem.
We started with the technician in the center, if you can picture our processes, our most important skilled worker is a technician, and built processes around him, around that person with tooling, training, more people, to make sure that technician was as productive as we could make them. By doing that, we were able to improve the productivity of that workforce by about 20%. That lessened the need for technicians, allowed us to grow without adding more people, and really drive the result that we were looking for.
We also implemented a technology and training program where we can get rapid deployment of training to our employees to ensure that wherever the market goes in terms of technology, if it's EV, if it's AV, we can rapidly deploy that training to our workforce. Then finally from a parts procurement perspective, another big part of our strategy, we used to have what's called Ryder Fleet Products. It was a parts procurement network to deliver parts to all of our shops.
We worked through with our OEM partners to close that network down, shed the overheads, have the parts delivered locally through our OE partners, and we were able to get parts at a lower price and same-day, next-day delivery, so adding value to both us and our customers by speeding up the time to turn a vehicle and lowering the price of the parts. Overall, we've delivered about $90 million in annual savings by the end of 2021. We expect this year we'll go over that $100 million that we had targeted three years ago. Just real quickly, I wanted to highlight our reliability team. We have a reliability and engineering team that works very closely with our OE partners.
What they do is they comb through all of our internal data, looking for high failure rates on certain parts, and then working with the OEMs to determine what the root cause of that failure was. This is an example of a NOx sensor where our team identified was causing problems in the business. We worked with the OEMs, determined what the problem was in this case. The way the part was designed, it was exposed to the elements, and it would fail because of that at a high rate. What the OEMs were able to do was execute a campaign to deal with what was the existing fleets out there and then re-engineer their product going forward so that we wouldn't have this failure going forward.
This really helps in three areas. Our customers benefit from better uptime. Our OEMs benefit because they get the data from us, and we also supply them competitive intel as well in terms of their execution on their product versus the competition. Then of course, Ryder benefits from lower failure rates and lower costs. This is a very highly repeatable process that we continue to deliver. All right, next, I have a short video just to highlight a little bit more about what it is that we do in FMS and then some of the technologies that we're bringing to our customers to add value.
Technology and innovation are at the forefront of everything we do at Ryder. This is seen in our maintenance solution that digitally connects you and your fleet with our service centers and highly skilled technicians. Powered by our innovative platform, RyderGyde, that connects you, your drivers, and Ryder personnel to your fleet, you get personalized service, improved fleet management, and real-time visibility of your vehicles. Additionally, for our technicians, our connected vehicle technology streamlines diagnostics and service based on fault codes, sensor data, vehicle history, and electronic driver condition reports submitted through RyderGyde. This allows us to know what service to perform and have the right parts ready when your vehicle arrives. Our augmented reality technology allows technicians to receive on-demand training wherever they are, so they can complete repairs on any make, model, and class, including electric vehicles.
By connecting our shops and technicians to you and your vehicles, we are creating a new standard in best-in-class vehicle maintenance that provides a one-of-a-kind experience, lowers the cost to operate, and keeps your business moving.
What we're trying to execute here in terms of RyderGyde is really bringing technology to our customers that add value and make it easier for them to do business with us. If you think about RyderGyde in the center connecting information from the truck and to our shops, from our shops to our customers and to our drivers, really a connected vehicle strategy to really make it easier to do business. From a fleet manager's perspective, a fleet manager can manage either a one-truck transaction or look at their entire fleet.
We provide them reporting and data analytics on things like cost, fueling, and real-time reporting so that they're able to make decisions about their fleet from a driver perspective, just making it easier to connect with us through vehicle condition reports and communication on follow-ups on their vehicles. Really just trying to provide value to the customer from a digital perspective, and make it easier to do business with us. Just wrapping up, our long-term targets here are to be in mid-single-digit% operating revenue growth. It's part of our capital allocation strategy. We recently raised the guidance on our EBT of operating revenue from high single digits% to low single digits%, and we believe we can execute on this if we deliver everything that we've talked about today.
Finally, this is the three key takeaways. We're well positioned to capture from the secular trends and address and win business from the large addressable market. From our price segmentation strategies and our operational excellence execution, by the end of 2024, going into 2025, we expect to deliver $225 million in earnings benefit from those two areas. We believe we're well positioned to manage through freight cycles based on what we've talked about today. With that, I'll turn the presentation over to Karen Jones, and Karen is our Chief Marketing Officer and also helps drive innovation in the company as well. Karen. I have a few crib notes.
Everybody else is so polished in their presentation, but I have a few notes I might wanna refer to, so I'm putting some pages up here.
I'm delighted to be with you this morning and really excited about the topic that I have to share with you. Just a little bit of my background. I am not a 25-year veteran of Ryder. I'm an outsider that's now become an insider. I have spent many years at Hewlett-Packard in the technology arena. I also worked at DHL Express. That was my first foray into the logistics and transportation business. I worked on the parcel side of the business. I also spent a fair amount of time at a company called NRG Energy, so working in the energy sector, and then for the last eight years, I've been at Ryder.
I will say that this is probably the most exciting time we have ever had in the transportation supply chain and logistics industry because of technology, right? You think about how it's advancing everything that we do, and the speed at which things are changing, and it's an exciting time. It's scary in some cases, right? Because we don't all know the future, but we absolutely have marvelous opportunities, sitting in front of us to really, really change the dynamic of what this industry looks like. What I want to leave you with today, and I'm hoping you're going to take away from this presentation, is that Ryder remains at the forefront of this industry disruption, and that we have a very disciplined and strategic approach to how we're making our investments and where we're making them.
Clearly, the investments that we're making, we want to focus on innovation, but not innovation for innovation's sake, innovation with a purpose that creates value for our customers as well as our shareholders. Jeff, thanks for teeing me up on this topic. Hopefully, I won't disappoint. All right. As I mentioned, there's been an unprecedented level of disruption in supply chain and logistics. About five years ago, as a leadership and management team, we got together in an offsite to really kind of narrow down the focus of where we wanted to put our investments and our bets on the returns that could potentially come to us. A lot of things that were out there, everything from blockchain technology to 3D printing. I see some people laughing in the audience because everybody's been through this ride with us, right?
At the end of the day, just like most things in life, if you focus on everything, you'll execute on nothing. We were forced to really look hard at what did we think were the opportunities for Ryder, and where did we want to put our time and investment. I want to take you through next, I'm going to spend a fair amount of time on this next slide, the four key areas that we took away from that day-and-a-half session of where we believe we need to be focused as a company and apply some rigor in how we move forward. Those four key areas, let me just highlight them for you very quickly. The first area where we are constantly looking to build, buy, partner is in the area of autonomous vehicles and electric vehicles.
The second area was the focus on e-commerce and the growth of e-commerce, even prior to COVID, very significant growth opportunities, and we knew that we needed to add some capabilities to really take advantage of the growth in that market. The third area is around asset sharing. Very important to our business, if people can begin to share assets, what would that do to our business, and how could we turn that into an opportunity for our business? Finally, around digital technologies. I know that nomenclature is overused, so I want to be very specific about digital technologies.
We do buy a lot of off-the-shelf applications to help us execute and run our operational business, but we're talking in this regard about those digital technologies that fundamentally create a different experience with our brand for our customer, and those that are customer-facing applications that set us apart and differentiate us from the competition. As we go around the wheel, this is called our wheel of fortune, if you will, I want to take you through a couple of the companies and the activities that we have been putting forward and give you some visibility into how we've approached this. In the area of AV and EV, I'll start with EV first.
We really are in a very enviable position as a company, to not only have great relationships with our traditional OEMs, but as you can imagine, every new electric vehicle company that's on the horizon comes to Ryder and says, "How can we partner?" We're very selective in looking at who we do partner with, but it gives us a wonderful opportunity to go through the litany of them and understand their product, their technology, the maintenance on that technology, how it operates, and so we will continue to be at the forefront of working across all those partners to determine what the best offerings are for the market for our customers. In the area of autonomous vehicles, we are partnering with the rising stars, I think you could say, to really begin to understand what it's gonna take to play in that certain segment.
We have relationships that we've announced with TuSimple, Waymo, and Embark. There's another little logo in that quadrant called Torque by Ryder. We didn't spend a lot of time on that today, but I want you to know it is an embryonic startup within our own company that is focused on retail mobile maintenance. There is a large market opportunity for retail mobile maintenance today, but we believe it is going to be a future capability that we need to know how to do and do really well in a retail application as electric and autonomous become the technologies of the future. In the area of e-commerce, MXD, which is our Ryder Last Mile business, clearly, we made an acquisition there to be able to play in the e-commerce big and bulky arena. Our recent acquisition of Whiplash that complemented our e-commerce business.
We are also focused on light-duty rental and bringing some light-duty equipment into our rental business, so that as businesses are delivering those e-commerce deliveries, we can supplement and augment them with a lighter duty kind of option across our rental fleet. In the area of asset sharing, COOP, we always kind of describe COOP. People say, "Is it co-op? Is it COOP?" We call it COOP. It's kind of like a co-op, but at the end of the day, the best way to think about it is, Airbnb. It's what Airbnb is for homes, COOP is for trucks. We always say it's when, Airbnb meets Match.com for trucks, so think about it in that context. It's really taking assets that are underutilized and putting them into a marketplace and making those assets available for rental.
I'm gonna dive deeper into that later in the presentation, but at a high level, that's really what it is. Our Midwest Warehouse & Distribution System acquisition is teaching us all the learnings we need for understanding multi-client warehouses and how to share space in a warehouse. Then over on digital technologies, we've talked about these pretty much throughout the presentation today, but I will do a deeper dive on RyderShare as we go through the pitch today. All of those products are our customer-facing products, where we are clearly setting the pace, creating differentiation, and leading the market in those customer-facing technologies. I want to switch next and kind of complete the wheel, if you will, with a little bit of information on our RyderVentures fund.
About a year and a half ago, we decided that it would be an important step for us to put together a VC fund, if you will, so that we could start to get a closer look at some of the startup technologies that are really apparent and happening today and continue to happen in this disruptive category. We committed about a year and a half ago to spend $50 million over the next 5 years to make investments in startup companies. We've seen, in that year and a half, we've reviewed 350 different startup opportunities.
The great thing about this focus of these four areas is that it helps us say yes to the things that are important in those four areas, but it also helps us say no to those things that are not part of our strategy long term. We have made out of that 350 only six investments, right? Many try, few get through. But we do need to be selective, right? We don't want to invest in everything that's out there. I wanted to just highlight for you next some of those investments that we've made and what those companies look like. Starting again over on the AV/EV side, Remora.
Remora is a company that's perfecting and building a carbon capture technology, and we call it sort of a bridge product for to a EV, if you will. But they have a very unique tank that they put between the truck the tractor and the trailer, and then they have a part that connects to the tailpipe to capture CO2. Their claim to fame is that once they have the model built and out there, it will reduce emissions by 80%. If you think about that's a pretty good step towards helping companies start to really chip away at their ESG initiatives, clearly. We're excited about that. Lots more to come.
We are running a pilot with them that will take off in 3Q, and hopefully we'll get some really great learnings out of that as we move forward. Gatik is a middle mile autonomous vehicle company, and what they are doing is very predictable. Not over the freeway highway, but very predictable middle mile routes from a distribution center to a storefront. They've started. They've been doing some runs for a big retailer that I can't name, but starting to really learn from that what that's going to take, what's going to be required, the types of vehicles, the types of situations that they will run into in operating that fleet in those routes. Very happy to have invested in them and partnering with them to learn that middle mile.
Baton is a technology platform that's really helping to reduce dwell time, all with an eye towards the AV world of when you drop off, loads and pick up loads, how do we maximize assets, yard management, and also, excited about the opportunities we have to learn from them. On the e-commerce front, Ohi is a company that is perfecting micro fulfillment, right? So micro fulfillment from very dense urban areas. So it's taking out about 2,000 sq ft in Chicago and being able to deliver within a two-hour delivery window. So what does that look like? How will that operate, and how can that actually enhance our e-commerce offering? In the area of asset sharing, we're partnering with a company called Haul. Haul is a driver marketplace.
I'm gonna leave it at that, but in this day and age, you can imagine, they're very busy, right, and taking on a lot of business to help make drivers available to the many companies that are in great need of drivers. SmartHop is the final company that we've made an investment in. They really are taking, through their technology platform, the ability to take these small owner-operators with one, two trucks, and they're pulling together loads, insurance, the ability to buy trucks, and kind of democratizing, if you will, the ability to play like a big carrier for a lot of these smaller players. Some really promising technologies. So far so good, but early in the day of the investment. We'll see where that leads.
I think the net takeaway here is that we wanted to make sure you understood that we have invested about $1.2 billion over the last four years. Clearly, a lot of that is heavily slated in our acquisitions to complete the focus that we have here. Nonetheless, a significant investment for Ryder that indicates our seriousness about staying on top of innovation and completing the products and services we need for the long term to create even more value for our customers. As if you haven't heard enough about RyderShare yet, what I wanna do is play a video for you because this video is worth, you know, 1,000 words. It really gives you the context of what does this thing do? Let's roll that video for everyone.
There's a problem with today's supply chains. They're disconnected, and the information that fuels them is locked away in silos, accessible only to a few. To put it in perspective, consider what it takes to move the trillions of dollars in goods that circumnavigate the globe every day. Getting these goods to consumers requires everyone involved in the supply chain journey to work together with complete transparency along the way. Yet today's industry runs on isolated systems, which create low visibility, causing costly mistakes and delays. Ryder has a solution, RyderShare, which combines Ryder's analytics expertise and over 86 years of logistics operating experience. RyderShare eliminates industry silos and creates a virtual ecosystem connecting all parties involved in the supply chain while providing four key values, supply chain visibility, network collaboration, exception management, and predictive business insights.
Simply put, RyderShare digitally follows the movement of all goods in and out of the supply chain, from raw materials to the end consumer delivery point. It also digitizes the supply chain by integrating multiple transportation and warehouse management systems into a single user-friendly view. This customer-centric approach allows everyone to easily and clearly see across the supply chain, collaborate with each other to prevent costly mistakes and delays, and course-correct when necessary, all in real-time. As a result, what took days of multiple people, phone calls, and paper chains now takes seconds. Products get to consumers quicker, the supply chain gets smarter, and the problem disrupting today's supply chain is solved.
All right. Hopefully, that gives you a little bit of insight into the actual product and what it's actually doing. I think the main thing that I want you to take away from this is that we started with the transportation side of the product, and in first quarter of this year, we actually launched the warehousing side of the product. At this point, we're the only third-party logistics provider that can give you what's in the warehouse, inventory levels, and then as it actually gets onto the transportation mode to take it to its final point of delivery, we can now connect those two pieces together, providing a solution that really is sort of unrivaled today in the industry. Very exciting for us. It is a key differentiator in helping us win business. You heard that earlier.
We know that about 35%, more or less of our new sales in supply chain and dedicated were actually the scale was tipped in our favor because we were able to come in and implement this technology. What I wanted to do next is take you through three customers who are actually using it to give you some insight into how they're using it and also the benefit that it's creating for them. The first customer is Do it Best Corporation. They are a hardware retailer with about 3,000 member stores. Let me just walk you through the slide very quickly. What was happening prior to RyderShare is that a store employee, if they wanted to know when their shipment was going to arrive, they would place a telephone call to the central support team at Do it Best.
The Do it Best central support team would then place a call to the Ryder operator and say, "When is my shipment gonna get to store 3,000?" The Ryder operator would then put a call in to the Ryder driver to understand where they were on the route and when the item was actually gonna be delivered. We had to wait for the Ryder driver, working back the other way, to call back to the Ryder operator. The Ryder operator then had to call back to the Do it Best central support center, and then central support actually had to call the store location. There is nothing real-time about that, and there's nothing efficient about that.
When we implemented RyderShare into their operations, it now is one glance into the technology basically, and it can be done from their central support organization who has the access to the same information that we have access to, or it can be us looking on the central support's behalf. But clearly, it made great efficiency gains for the Do it Best folks. It improved their labor planning so that when the stores were getting ready to have shipments and deliveries made, they could plan staff appropriately. Overall, just has given them a much higher level of service as they move forward. The next case study is really around Hill's Pet Nutrition. They have a network of over 30,000 veterinarians, pet hospitals and pet clinics that they deliver pet supplies to.
They were having difficulty getting to those 30,000 locations and helping them understand when their shipments would actually arrive. As they deployed RyderShare into the environment, it really has saved them a tremendous amount of time on getting to those 30,000-plus locations to help them understand when product would actually arrive at their store location. The other challenge they had is that sometimes they needed proof of delivery, not sometimes, all the time they needed proof of delivery, and that wasn't happening easily. The condition of the product when it arrived, you know, sometimes was damaged, and so being able to have the digital photography, the proof of delivery, and all of that seamlessly integrated into the delivery of the product has made a huge difference.
I think the customer probably says it best in their quote, "The RyderShare platform has allowed us to have real-time tracking and ETA for our customers' orders all through easy-to-use technology." The last customer example that I wanna highlight is Southern Glazer's Wine & Spirits. They are the largest U.S., or North America distributor of wine and spirits products. They have over 250,000 retail establishments that they deliver wine and spirits to. Pretty massive when you think about entertainment venues, hotels, sporting events, liquor stores, you name it, but 250,000 in delivery points. They also have a number of suppliers, right? Clearly, the Bacardis and the Diageos of the world, and even getting their international shipments and importing wines and spirits from overseas.
With them, we've been able to tie in and give them visibility once the products are here in the U.S. Then from the U.S., suppliers, actually being able to show them and move not only our dedicated transportation, but our transportation management services and everything that's going into their warehouse, so they have visibility to know when those shipments are coming. The neat thing about what they've chosen to do is to create email notifications then to those 250,000 retailers. A retailer gets an email notification set up on their preference that says, "Your shipment will arrive in 30 minutes. Your shipment will arrive tomorrow." That's all predicated on what Southern Glazer's Wine & Spirits has set up with that retailer, but they have the ability to get that information easily through a text message.
It can also alert them if there's gonna be a late delivery, right? We said we were gonna have it here at 2:00, now it's actually gonna be here at 5:00. An incredible tool for them. They have about 2,000 customer service people that they deploy to manage those 250,000 retailers, and it's making a significant difference in the levels of service and the accuracy of the orders that they're fulfilling. Again, an exciting product. We're gonna continue to evolve that product, build even more capabilities as we move forward, but we think we have a clear winner. All right, building for the future.
What I wanna talk about next is a couple of products that, you know, really are probably four-five+ years out in, starting to begin to understand what the economic models could be around it and what kind of real return that could create for the company. Nonetheless, and I think Jeff made the point earlier, if we're not looking at those things today, where will we be in the future if we're not really innovating now and thinking about what those things are? I want to spend a little bit of time on autonomous. I'll cover electric vehicles, and then I'll wrap up with COOP. In autonomy, we have figured, with the partnerships that we've evolved, and I mentioned those earlier, that we have four key areas that Ryder can create value in an autonomous world.
The first area is in the first and final mile segment. With our dedicated transportation, we can be that first mile and the final mile of that autonomous route, right? The pickup and the final delivery point for that over-the-road fleet. The second area is we can actually be a fleet operator, right? We operate on behalf of customers today. We can absolutely operate an autonomous fleet on behalf of those same customers. The third area is in the hub network. If you look at the number threes on that slide, there will be an entry point and an exit point for those autonomous vehicles coming in and out of the yards.
We are really well-positioned and uniquely positioned to be able to run those operations for them, leveraging our assets, leveraging our maintenance skills and capabilities, and that is exactly what we are doing with two of the partners that we've announced so far.
Finally, back to our RyderShare, having that control tower of looking at all those movements from the first to what actually goes on to the autonomous fleet, to the final movement, and to its final delivery point, being able to bring that value to our customers to say, "If you put it on our autonomous fleet, we can give you the entire visibility to how that freight is moving." With TuSimple, we are leveraging a couple of our facilities early on here in Texas. A couple of our shop locations are actually being stood up as hubs for them, and we are testing what is it gonna take to operate those hubs, how are we gonna operate it from a maintenance and a yard perspective, and a pickup and a drop-off location, a trailer kind of pooling location.
We're again learning all those things early on so that we know exactly what we need to do to deliver to customers long term. With Embark, they are actually making the investments in properties. They are not leveraging our network. They have a different model altogether, but they do not know how to operate a facility. We are again in Texas going in to help them maintain their fleet, manage the yard, and manage the facility that they have chosen. Most of this is starting in Texas. As you can imagine, Texas, Arizona, that whole area is really AV friendly just because of weather and environment.
That's where we're starting with them and, really excited about where we will end up, but again, in a unique position, I believe, having forged these relationships early, to get to, great products and capabilities for our customers. In EV market penetration, it still is one of those areas that continues to elude us, on the timeline, continues to be elongated. As I mentioned earlier, we are in an enviable position because we have conversations with pretty much everyone who's in the EV, truck business out there. We have really modeled, based on our conversations that we've had with them, with the traditional OEMs, what we believe the impact to production is gonna be based on what they've said their volumes are over their time horizon.
I think, you know, the main thing to take away from this slide is that in heavy duty, it is going to be a while before heavy-duty trucks go all electric. Medium duty, a little bit more promise, over the next three years, but light duty is really where we believe you're gonna see the first entry, with any amount of significance in the EV category. Why is that? Cost parity, right? With current light-duty vehicles, it's not so off. In the heavy-duty category, you're looking at 2x or 3x the cost of a traditional diesel vehicle. Battery life and charging infrastructure, which is really important, right? Very costly to put in, what's required to operate, a large scale vehicle versus a light-duty truck.
I think, you know, all said and done, light duty represents an important opportunity for us and our fleet mix, and we're staying very close to what's happening across all of these classes of vehicles. Thinking that light duty will be where we start to see the inroads the fastest. The last of my presentation is really around COOP. I wanted to play you a quick video again to help you understand a little bit about how COOP operates and works.
When you use COOP, you're connected to real business owners looking to share their vehicles. Whether you're looking for your next rental vehicle or interested in generating extra cash from your idle trucks, COOP connects you to the right people. COOP's mission is to make trucks easy to share. Our platform allows you to easily list your vehicles and generate extra cash by renting them to trusted businesses. All users on COOP are rated and vetted to ensure your experience is safe and secure. Each transaction is covered with a $1 million liability policy and 24/7 roadside assistance, so you can trust that your vehicles are in good hands. With COOP, you are in control. Manage your fleet, look for the vehicle you need to rent anywhere, anytime, manage your reservations, and review your earnings and previous payments, all at your fingertips.
COOP is one of the fastest growing suppliers of rental vehicles. Whether you need a substitute vehicle or want to rent your unutilized truck during a slow season, getting started with COOP is the easy way to keep your business moving. Once a local business finds the vehicle they're looking for, they'll submit a reservation request. The vehicle owner will approve and send the borrower pickup instructions. It's that simple. With COOP, there's no paperwork and no waiting in line at the rental counter for pickup. Use your mobile device to take a few pictures of the vehicle, and you're on your way. Using COOP means helping another local business. It's a great way to support your business community while fulfilling your transportation needs. COOP, making trucks easy to share.
COOP is really our startup within a large corporation. We've created a startup in our company. Very exciting, we are doubling down on our growth this next year. We were in nine markets last year. We're adding another 16 markets this year where we're doing deep penetration. As you can imagine, those markets are the ones where the heaviest fleet population is. Very exciting to watch this product grow. You know, we believe that over time, we will create the largest peer-to-peer truck sharing company without owning any assets. We do think this could be a huge benefit to our Ryder rental business as an augmented or supplemental supply to our rental fleet.
It is very early days still as a startup, but it is showing very promising signs, and we're excited about the potential for the long term. I'm gonna wrap it up with just, reminding you what I hope you have taken away from this 30 minutes, is that, we are at the forefront of disruption. We're staying on top of it, clearly, as a company. We have a very disciplined and strategic approach to what we're investing in. Ultimately, if we make the right bets and we do the right things here, we are going to create, value long-term for our customers and clearly for our shareholders. Thank you for the time, and what I'd like to do now is turn it over to the man that everyone's been waiting for, the Chief Financial Officer, John Diez.
You're funny. I trust all of you enjoyed hearing from Karen really how we're transforming and innovating our industry. Good morning. I am John Diez, Chief Financial Officer at Ryder. I've been with the company now for 20 years, and as you heard from others, probably the most exciting time for our industry, for this great company and really the opportunities ahead for us. I came back to finance last year after more than a decade of being in the business, so many of you that have interacted with me in the past may remember me from the fleet management side. I joined that group back in third quarter of 2019. I joined Tom and the team, and we kickstarted the transformation you heard about from Tom and Robert earlier today.
Some of you that may have been here at our last Investor Day, you may remember me from Dedicated. I had the opportunity to work with that team for several years. You've heard from our team, where we've come from, where we're going. I think it's important to just take a pause and think about coming out of the last downturn in 2019. There were a few questions about Ryder. There were questions around the risk profile of the business, and there were questions around what is the earnings durability of the business through the cycle. Today we're gonna provide a little bit of evidence of, you know, how we transformed the business model, the earnings performance of the business, and clearly for us, we still see plenty of runway with the business going forward.
We've also talked about the structural changes we've made, which really address the durability and the increased core earnings power of the business. You'll hear about our capital allocation priorities and really focused on creating long-term shareholder value. Lastly, clearly creating flexibility with our balance sheet to return even more capital back to shareholders over time. Before we get into the long-term discussion, I do wanna just highlight, we put out an announcement, Robert touched on it. We did increase our forecast this morning, increasing our comparable EPS forecast for the full year and the second quarter. You'll see there, we increased the range by $0.40, both on the second quarter and the full year. Our full year forecast range now is $13.40-$14.40.
As well, you'll see there on our return on equity measure, we're lifting that by a point, so we're lifting it from 23%- 25% now. We expect to be at 24%-26%. Two key points there. We're continuing to see great progress from our pricing initiatives across all our businesses, so we've seen an acceleration there. We do see strong rental and UVS results in the second quarter. It is important to note our market assumptions and our view for the business going into the second half haven't changed. As we look ahead, we do expect rental and UVS to soften, and we've been consistent on that point throughout the year. You've heard from the team, a lot of hard work has been put into driving the strategy. It's exciting to see.
If you look at our growth trajectory, we've never seen a robust growth trajectory like we've enjoyed the last two years. Each of the last two years, on the left-hand side, you'll note we grew the business double digits, and the business has grown from a $6 billion business to now a $9 billion operating revenue business. At the same time, we also grew profitably, and clearly COVID provided us a shot in the arm as well. If you see there, both from a returns perspective and from an earnings perspective, we're at record levels. This year, as I mentioned earlier, we're gonna be in, from an EPS perspective, in that $13-$14.40 range. As you heard from Robert, we set out a few years ago to really transform the business.
Transform the business from a strength of our FMS business as well as accelerating the growth in supply chain. Really when we focused on the fleet management business, we looked at doing the things you've heard about today, de-risk the model and really drive initiatives that are gonna create durable earnings and long-term value for our shareholders through our pricing initiative as well as our maintenance initiative. We quickly also pivoted to growth acceleration with supply chain and dedicated, and you saw the results.
We've had great results there, organically as well as inorganic, and clearly going out and acquiring Whiplash and really driving our expansion of our e-commerce solutions is gonna provide us great opportunities into the future to continue with our shift in the model. Lastly, from a capital perspective, really a lot of work has gone into strengthening our balance sheet and providing us the opportunities to make acquisitions as well as be able to return capital to shareholders. The results are over on the right-hand side. Clearly, the transformation is having an impact. The business was growing in that mid-single-digit level. We now have high-single-digit expectations for the business. From a returns perspective, clearly that's been a big highlight for us and the change we've made there, and I'll touch on that here momentarily.
As we came out of 2019 and we saw a deterioration in used vehicle proceeds in the business and that was a result of the freight cycle and what it was doing then. We really clearly had to do something different. Our approach to our fleet management business, we looked to, as you heard from Robert Sanchez, how do we minimize the losses on the backside when we trade out of equipment? Then secondly, how do we reduce the reliance on used vehicle proceeds to get the economic returns we're expecting in our ChoiceLease product line? In doing so, we had to really take a hard look at residual values. You'll see there both from an accounting and pricing perspective, we reduced residual values to historically low levels, right?
The graphs presented here, on the left side you have our truck historical proceeds, and on the right side you have tractor historical proceeds. You'll note on the truck side, we do have them at trough levels. If you look back in history, obviously 2022 you've seen the strong market and what it's done to proceeds over the last 12 months. Then on the tractor side, we also made an adjustment there, and probably the most significant adjustment for us was getting them down to historically low levels while incorporating for ourselves a freight cycle downturn which impacted about 15% of our tractor fleet. Those adjustments that we made to residual values really had a significant impact on our earnings in two ways, and it manifests itself in our depreciation expense.
First, our ongoing depreciation increased, and I like to call our base depreciation. You'll see there on the left-hand side our base depreciation on a per unit basis went from 7,100 to now over 8,000 per unit. Clearly that is part of what we're pricing into the model and the customers clearly are having to digest some of that price increase. More importantly is the gray bars there, which really talks about the changes we made to mid-life vehicles created an increase in depreciation to really get the residuals down to our expected levels when they come out at the end of their lives. That created $200 million of extra depreciation in 2022. That will diminish as the fleet gets replaced.
You will see that depreciation expense burn to diminish, and that is reflected in our earnings results. Despite that $200 million, we're delivering great results in the business and look to deliver that going forward. Here's a long-term view at our returns. Great chart. It gives you an idea of where the business has been. If you look at the left side there, Robert touched on it. We were a low-teens returns business for a while there, and then COVID hit, and obviously the freight environment changed on us. Then as we come out of COVID and looking ahead, clearly the returns and the returns profile for the business have taken an upturn. We are targeting a high-teens return on equity over the freight cycle.
You will see periods of when the freight cycle takes a downturn. You will see periods we're gonna be in the mid-teens, and that's at the trough level. Clearly at stronger parts of the cycle like we're in today, we're gonna be above 20%. As important for us is we think we have visibility to a tremendous number of initiatives that are only gonna augment and really add over time to our performance. That give us confidence really on our ability to deliver this over the freight cycle and potentially increase that target over time. You know, we have come a long way. We started with an initial target of 11%-12% coming out of, you know, the doldrums there in 2020.
We raised that to 15%, and now we raised it earlier this year to high teens. This is really exciting. This is kind of the proof point, all the hard work that the team has done to really get the core earnings of the business up. This chart gives you a walk of 2018 to 2022. 2018 being our prior cycle peak. As Robert shared, $5.95 was our EPS back then. We're now looking at 2022, a midpoint of $13.90 relative to our guidance that we just gave. $9.25 is our core earnings.
That $9.25 reflects, as we mentioned before, $75 million of normalized gains on used vehicle sales. As well as our rental performance reflective of historical utilization levels, which are in the mid- to high-70% level, and down from the strong 80%+ that we're enjoying today. If you look at the components of the earnings drivers and what has really driven the core earnings performance over the last couple of years, clearly depreciation was a headwind. We talked about the residual value adjustments we made. That is net of improved used vehicle gains or used vehicle sales gains in the business. You see the power there of the pivot to growth acceleration in our supply chain and dedicated businesses, which have grown profitably in that time. You heard from Tom, our maintenance initiatives are driving tremendous value.
We're gonna achieve our $100 million multi-year initiative target this year. Then when you look at our lease pricing, we've covered 40% of the fleet, 60% to go, and clearly we're seeing the benefits of those initiatives in the model. This is looking forward, you know. Building off the $9.25, how do we continue to build off the momentum we've got? The first item in the near term that we see for us is our supply chain dedicated business. The majority of the contracts that we needed to address from a pricing standpoint have been addressed. There's still some more work to be done there, but we do expect that to return back to high single digits% in the second half of this year, as you heard from Steve and Steve.
More importantly, that will carry over into next year, and we'll get the benefit in the first half of next year from the carryover effect of those contract actions. From a lease perspective, there's still room to go there, right? To achieve our $125 million full benefit, that's gonna deliver growth for us. Robert talked about the exciting pieces of the business, which is we're gonna continue to grow the businesses and continue to grow each of those profitably. Clearly, making acquisitions in the right space and making strategic acquisitions to really grow the business and prepare us for long-term value creation is what we're focused on, and we can take advantage of our balance sheet to obviously provide capital back to shareholders, which will increase our EPS over time.
Similar to the earnings story, we have seen the trajectory and the momentum on our cash flows also improve over time. If you look at the right side there, our operating cash flow now has grown to over $2 billion. The business was generating $1 billion to $1.5 billion a year, and that's reflective of the growth we've seen in our contractual businesses. That operating cash flow is a recurring cash flow supported by our supply chain dedicated, how we scale those businesses. They'll continue to provide more of the operating cash flow. Our Choice Lease product line, which clearly is the lion's share of that, which produces a tremendous amount of operating cash flow each year.
85% of our business is contractual recurring in nature, so that number should continue to move up as we grow the business. From a free cash flow perspective, kind of, tells two stories. You see there prior to 2019, negative free cash flow. That was reflective of a higher lease growth environment for us. Clearly 2019, the fleet grew tremendously, so you see the negative free cash flow there. Then 2020, impact of COVID, clearly. 2021, we started seeing also OEM delays, which pushed some of that capital into 2022, and then obviously into, we expect that to potentially continue into 2023. Then 2022, we do expect the fleet to grow in that 4,000 unit range, so good free cash flow from the business this year.
That number also includes about $300 million of U.K., disposals that we expect during the year as we exit that business. To set the business for us, the business by itself with no lease growth yields and generates about $800 million of annual free cash flow. With our moderate lease growth strategy, you should expect $400 million. Clearly, the way the business progresses at average growth, you'll get that. With normalized replacement cycles, our replacement cycles are not uniform, unfortunately, in that they're a little lumpy. You are gonna see in times of high replacement, you're gonna see much lower free cash flow. In times of lower replacement, you're gonna see positive and robust free cash flow performance. From a capital allocation and our priorities there, really focused on driving long-term shareholder value.
You'll see there our top priority is still to invest in organic growth, and we continue to obviously support our ChoiceLease business, which draws a lot of capital each year as we replace and grow that fleet over time. Looking to continue to invest in supply chain and dedicated activities. Clearly investing in technology, as you heard from Karen and Steve, is a priority for us. At the same time, we're looking to make acquisitions that are gonna set us up for long-term success. I'm gonna give you an example of what we've seen with the transformation of our supply chain business. Clearly adding capabilities, expanding our geographic breadth in the supply chain business and looking at opportunistic acquisitions will continue for us.
Lastly, from a return of capital to shareholders, we have a great track record of returning capital to our shareholders, over $2 billion since 2008. We expect to, as the business continues to deliver great earnings, and earnings growth will give us the opportunity to increase our dividend over time. As well as with the balance sheet, we should have the opportunity to continue to do acquisitions as well as share repurchases once the ASR expires. This is really exciting. This is how our acquisitions have helped transform our supply chain business. Karen talked about MXD, and we talked about Whiplash. Those were two great additions to really introduce us into the e-commerce space over the last couple of years. You'll note we now have, as Steve calls it, a port-to-door logistics solutions. We couldn't offer that to our customers previously.
Clearly, the technologies we acquired as part of those acquisitions has also given us an upper hand in creating value and enhancing our value prop with our customers. More importantly for us is, look, we're really well positioned going forward to take advantage of the e-commerce space and the growth trajectory, that we expect from that segment. You'll note there the business has also been rebalanced. We started 40 years ago, our supply chain business supporting the automotive industry. Today, the automotive industry or the automotive vertical, I should say, has been reduced to about 25% of the portfolio. That's where we're gonna finish this year. Lots of good work on the balance sheet side. We've strengthened the balance sheet over the last couple of years. Obviously, the free cash flow has helped tremendously there.
We've got more than ample liquidity to take advantage of the strategic opportunities in front of us. From a leverage standpoint, you'll note there we're at the lower end of our target range of 2.5-3.0. We do expect that leverage point to continue to come down over the year. We expect to be below that range, which will provide us opportunities, like I mentioned, to look at M&A opportunities or increase dividends and deploy capital back to our shareholders. This is really a great recap of the momentum we have in the business. We've increased the number of these targets. Really is a reflection of our confidence in the business, a reflection of our confidence in the earnings durability of the business that we're seeing. Most importantly for us is our return on equity measure.
Clearly, lifting that target to the high teens from the mid-teens, target was a big deal for us. We're clearly focused on how do we continue to drive that number up. More importantly for us is, are there opportunities for us to add to that over time? To wrap up here, a few things. Number one, we're seeing evidence in the model that the earnings quality and the core earnings momentum will continue, and we're very, very excited about the opportunities to deliver great earnings over the freight cycle. Our capital allocation priorities not only impacted the business through the acquisitions, and we continue to look at opportunities to create long-term shareholder values by making solid acquisitions over time.
Lastly, looking at continuing to deploy capital to our shareholders and really create a sustainable model for our shareholders over time as we continue with our strategy here. With that, I wanna thank you for your time today, and I'll turn it back to Robert to provide some closing remarks.
All right. Great. Thanks, John. All right. Listen, thank you all. You know, when we first thought about having this investor day back at the beginning of the year, you know, I really felt we needed an opportunity to talk to you about the new Ryder. I think for a company that's been around 90 years, it's not unusual that over time you have to pivot and you have to transform the business to really accommodate for the changes that are taking place in the marketplace. Today was really about having the opportunity to talk to you about all the important work we've done at Ryder over the last several years to change the business model and make it a new and better Ryder. Hopefully you're walking away with a better understanding of what that is.
If you think about the focus has been the balanced growth strategy. That's really the key to getting this new Ryder going. It's about de-risking the business. You heard Tom and John talk about the changes we've done around residual values and the way we price our business. It's about improving the returns and the free cash flow with the balanced growth strategy, all the good work that Tom and his team have done in FMS, and then accelerating the growth in our higher return supply chain businesses. It's about investing in the future.
Listen, we wanna be around for the next 90 years, and the only way we're gonna do that is by continuing to invest in the services we offer today, but also investing in disruption and some of the changes that we're gonna see over the next 10, 20 years in the industry, and make sure Ryder continues to be a leader in that business. As you look at valuing the company, I think that's really what the message we wanted you to take away is make sure you have a good understanding of what the new business model looks like and how it can perform, not only for our customers, but also for our shareholders. With that, I think the final piece is we're gonna do some other Q&A. I'll call our moderator, Bob Brunn up to lead us on that.
Okay. We've got about 20 minutes for Q&A here. Again, we'll take questions from the room. Got a couple folks with mics. I would ask when you get the mic, please hold it close and speak loudly so it picks up on the audio, and then if you're listening virtually in your home in your bunny slippers, you can still ask questions. Didn't get any last time, but this is your second chance for it. We'll start here in the room if anybody has any other questions. Nope. Jeff.
Close.
There you go.
All right. A shorter term question. In the 1990s, Tony Burns era, massive growth, massive investment, massive negative free cash. There were the Greg Swienton austerity years. Less growth, massive free cash, you know, not negative. The 2010s was really a big period of negative free cash again. It almost looked like a return to the Tony Burns era, where we, you know, either we invested, overinvested, a lot of growth at the company. Now the message I'm hearing today is moderate growth, consistent free cash generation, except where we're doing heavy fleet replenishment. I guess my question is, what's changed strategically in terms of your view on what size the company needs to be? It seems like more of the growth is acquisitive on the new technology side that was being discussed.
Is this a change in philosophy on total corporate organic growth rates and generation of free cash?
Yeah. Look, great question. I think it's, as the name says, balanced growth, right? If you think about the too much growth and not enough growth, this is the Goldilocks that we're trying to achieve of balanced growth, which means we do need to grow the business. A business that's not growing is a business that's going out of business. We need to grow the business, but the asset intensive business, we wanna make sure we're getting the right returns, that we derisk the business and continue to grow that. The demand is there. You know, we're in a pretty enviable position, I think, in business, where we actually have the opportunity to select where and how much we wanna grow. We wanna be selective about where we grow in the fleet management business.
Then we've got this great business that has been built up over decades on the supply chain and dedicated side. Now how do we accelerate that growth? Because the demand for those services is greater than it's ever been. We think the returns in that business over time can be very, very strong and really help to change the profile of the earnings of the company. That, that's really what's changed is really our view of where we wanna grow and how we balance that.
Thanks, Jeff. Go on then from Todd.
Great. Thanks. Todd Fowler again from KeyBanc Capital Markets. You know, John, maybe just to follow up on the leverage, you know, slide. It seems like that if you hit on kind of all the targets that you've got out there, you'll actually start to deleverage a lot quicker. You've just put out a path to, you know, earnings that is probably somewhere in the low double digits. With where the stock's trading, you know, maybe not a lot of credit for that. How do you think about, you know, the leverage, where the stock's at, and maybe doing something? You've always been balanced on the share repurchase.
Is this an opportunity to really, you know, look at the value of the stock and look at the cash generation that you're expecting and where the leverage is gonna be to do something more aggressive?
Yeah. You know, you mentioned the business model naturally will delever over time, so we just made these acquisitions, and you saw our leverage move up. Clearly, as we exit out of our accelerated share repurchase program, which we expect that to expire in Q3 of this year, we'll look at, you know, where we're at from a leverage standpoint, where we're at from an acquisition standpoint, because there are opportunities out there still, and we'll make the right decision to look to deploy capital back to our shareholders, if need be.
Okay, great. Just for a follow-up, you know, the slide where we showed the progression, I think it was slide 91, on kind of the earnings cadence, and I had the question about used truck, and I think you did a good job of kind of answering that. One I do wanna get a little bit more color on is, I understand on rental, there's kind of the normalized level, but historically, you know, rental can be cyclical.
Maybe for Tom, how do we think about the potential that in a softer environment, and it doesn't sound like that's where we're at right now, but you know, the cyclicality of rental in the down part of a cycle, you know, how much of a drag can rental be, and how do you manage that with the size of the rental fleet relative to you know, customer demand and kind of the service offering that you have? Thanks.
You know, you're right on. We have seen during the cycle rental be impacted. There's no doubt about that. You know, the range in which that will happen in terms of earnings.
Did we put that number up?
No, I think from a rental perspective, one of the things we have seen is utilization will go through periods of strengthening and then softening, and what we do when we see the market soften, we'll defleet in the rental organization, so that mitigates some of the earnings impact for us. I think what's different for us today, which Tom will mention, is our balancing of the fleet and who we're doing business with. We're really seeing good momentum and acceptance for truck rental activity as opposed to our tractor fleet, which the tractor fleet is the one that's most impacted by the freight cycles, but I'll let maybe Tom talk about that, how we see that moving forward.
Yeah, obviously, we've mentioned before that we're investing in more truck classes, right? To go after e-commerce, which has proven to be less cyclical. More of the cyclicality has come from that tractor space. Our growth capital is going into rental trucks. We're not growing the tractor classes. Now, we've also spent a lot of time. I talked a bit about segmentation in leasing, but also segmenting the customer profile as well. We're not growing today in that tractor space where maybe you could have. But we haven't invested in the tractor to go after that market. When it turns, we've got this core business that we're able to continue to rent vehicles to.
The other point I'll make, which I didn't make in the presentation, was that as supply chain and dedicated become a larger part of our business, gives us more flexibility in how we manage that fleet. You know, for example, I may not have to go out and purchase new assets for new business that Steve and Steve are selling. I can leverage the rental fleet and move it into those applications depending on where we are in the cycle.
Yeah. I guess the only thing I'd add, Todd, is that the impact of rental, the volatility of rental is built into that non-core earnings that we talk about. We've built in already the idea that, hey, as you go through a cycle, you are gonna see rental slow down. Tom's team is doing, you know, a great job. I think we're in a better position than ever in terms of our ability to redeploy equipment, focusing more on the less cyclical parts of the rental market, which are the truck side and the e-commerce, not the for-hire transport on the tractor side. Managing that is an important piece of it.
Ultimately, you know, I think we do have some volatility that will happen in rental, as it will in used UVS, and those are the pieces that we've really taken out of that non-core earnings component.
Thank you.
One in the front here with Brian.
Brian Ossenbeck with J.P. Morgan again. John, maybe you can put a finer point on free cash flow. You got the $400 million with some growth, which I assume will continue. You talked about the volatility through the cycle. If you can talk about what type of gains you're assuming in that $400 million, and then also can this be positive through the freight cycle?
Yeah. I think the latter part of your question, we do expect that over the freight cycle, we're gonna be able to generate positive free cash flow. Clearly, that's part of the transformation that we've driven to. I would tell you with regards to how gains impact that number, we do expect the cycle to take a downturn here in the next couple of years. That is built into our models. Our normalized gains is in that $75 million-$100 million, and that's what you would expect there in that assumption.
Okay. Thanks for that. A lot of focus on RyderShare. Just wanted to come back to that a little bit. Can you put some metrics or some scope or scale around how big that is now and maybe where you think it can get to in the future? Just from a capability perspective, the three examples are really helpful, but it seemed like maybe if I'm interpreting it correctly, maybe only one of them really expanded to pull in a lot of other pieces of the supply chain, which is obviously hard with all the silos. Some of it seemed, at least to me, to be more optimizing like Ryder fleet. If you can maybe talk about the capabilities and evolution of that and some scale and scope would be helpful there too. Thank you.
I'll take a stab at the scale and scope, and then Steve and Steve can talk a little bit more about that. We use those three examples. Clearly, we have a lot more customers that are on it. The whole goal of the technology and the software is not only to handle our own Ryder-dedicated fleet but clearly go outside of that as well. For our managed transportation, which is, you know, 3,000+ carriers, right? It's pulling in all the data from those carriers as well. You know, long term, looking at more intermodal, parcel, all of those components on a customer's behalf, we'll be pulling those in and building those capabilities in the platform. It's not meant to be just the Ryder fleet.
It is definitely gonna be outside of the Ryder fleet. Having the APIs and the technology to pull all of that data from elsewhere is what we have to work individually with customers. Absolutely some more scale there. Anything you guys wanna add?
Yeah. I would just add, we have well over 100 customers that we've targeted, primarily dedicated and TM. 4,000+ users right now on the platform.
Yep. Yeah. Thousands.
We've also got different features and functionality that we're gonna put on it. We rolled out warehousing in Q1. We've got a long roadmap there that we'll be doing over the next couple of years and then adding brokerage.
Brokerage. Yeah.
into it as well as Steve looks at this density build, you know, within the key markets.
You know, just one little add-on that is our transportation management business. All that—most of that business is not on a Ryder truck. This is third-party carriers. It's been implemented with these customers that we're getting data from all these third-party carriers and also giving the customers that visibility and that collaboration.
Thanks for those. We'll go to Bert.
Thanks. Bert Subin from Stifel. Just following up on that RyderShare commentary, why do you think your peers don't ultimately catch up on the technology? You've talked about it as being sort of a competitive differentiator. Is there a reason you have that lag period between you and your largest peers?
I mean, I think, you know, clearly, we had an advantage in time to market. I think with all technology, eventually people catch up, right? You have an exclusive period for a window, but that's all the more reason to continue to invest and innovate. I think we have a great advantage because we're already at the forefront. We're already looking at those next applications we need to add and pieces, features and components to stay ahead of the competition. But clearly, we had a window to market that they didn't have. You know, great for us and we need to just continue to push the pedal to stay there.
You know, I'd just add that I think RyderShare was a good test case for Ryder about, hey, can we really differentiate our product with the technology? The answer's been a resounding yes, not just the feedback I've gotten from customers, but the number of deals that we now won because of RyderShare. That's really I think, you know, a good window into what the future's gonna look like. The future's gonna be Ryder's much more of a technology company. Obviously, we're building out those capabilities internally. We're leveraging some relationships that we have with third parties, but over time, it's continuing to build that capability.
We can stay, you know, I hate to say, I wanna say two years ahead, maybe you stay six months ahead sometimes because that's how the competition works, but that's fine. As long as we're ahead, it allows us to continue to win.
Maybe just a follow-up back on the dedicated side, because there's been a lot of talk about, you know, used sales and rental being sort of the rush, the reason behind some of the excess earnings growth. I would imagine if we do go into a freight cycle, dedicated would experience some volatility. Is there any commentary on what you're seeing there now, just given spot rates coming down? Thank you.
The volatility we see in a down cycle is more optimization, so it's volume within existing accounts. I don't think the growth when you look at the opportunity in the market, private fleets are still gonna be challenged with those secular headwinds of hiring drivers and dealing with the complexities of the business. There's significant growth even through that down cycle.
It kind of ties back to the question you asked earlier about the margin differential. If you look at what some of the other more traditional trucking companies are doing in terms of dedicated, it's more dedicated capacity where I'm sharing assets across customers. There is more risk in that, right? When the volumes go down, you're gonna see some compression. The vast majority of what we have at Ryder is pure dedicated. It's, you know, 10 trucks for this customer, and it's a fixed price to those customers. They're gonna pay for the 10 trucks regardless of what happens with the volume. Less susceptible, I think, to the freight cycle on our dedicated side than what you might see in other areas.
Let me take a couple questions from the virtual audience. The first one is, does the $8,400 of depreciation per unit go higher with higher new truck prices or lower as extra depreciation comes down?
Yeah. Great question. The $8,400 is our base depreciation, so it excludes that portion of the $200 million. That $ 8,400 will continue to grow. As we've seen surcharges from the OEMs and the commodity costs continue to move up, whether it's steel or other components, we do expect that $8,400 to continue to move up over time. Obviously, the customer's ultimately paying for those increases from the OEMs, so you should expect that to move forward.
Okay. Next one is, how much do used prices have to fall to get to the normalized gains you're targeting, the $75 million-$100 million?
Yeah. I prepared that chart, and it gave you a pretty good indication of how far we've come, and it's kind of an astronomical uplift that we've seen in sales proceeds. I would tell you today our gains are in that $300 million range, which is pretty significant. You're looking at overall proceeds for us, which if you think about high proceeds for us is $800 million a year. They'll need to come down another $200 million, and you could do the math on the percentages there to come down to those normalized levels.
Okay. Third one is, what's the plan to repurpose the rental vehicles if there's a pullback in demand for short-term rentals?
Tom, you wanna take it?
Yeah. I mean, I mentioned it briefly with what we do to redeploy the assets, but there's a number of levers that we can pull. For those vehicles that are at age, we can sell some of them at a certain age. We look to redeploy vehicles, some into Steve and Steve's application, but even more so to the broad base of lease customers that we have out there. You know, like I said, we've got 14,00+ customers that we deal with. They're always looking for new trucks, and in some cases, we'll redeploy that used asset versus going and purchasing a new truck for a customer.
We've had some success with that in the past and moving through those assets pretty quickly with the amount of sales that we do.
I think that's an important point. For those of you that haven't followed the company that long, historically, the right sizing of the rental fleet during a downturn is about a 90-day exercise where it takes us from when you see the downturn to when we get the fleet down to exit to where it needs to be to get the utilization right. Obviously with the work that Tom and his team have done, and how do they do that? They redeploy into lease applications. They redeploy into dedicated and supply chain truck operations. With the work we've done, I would tell you our goal is obviously to do better than that. I think we've got a pretty well-tuned machine in terms of our ability to get that fleet right-sized.
You don't make up for the lost revenue, clearly, but you certainly minimize the drop in returns and in margin by right-sizing the fleet.
Okay, the last one I have from the virtual audience is: It's a fascinating insight that RyderShare is the key differentiator in winning a third of 2021 sales in SCS and DTS. Has the team considered whether to break out RyderShare as a specific revenue stream? Likewise, how about other software in general?
I'm almost afraid for Karen to answer that.
Thank you, Robert.
Go ahead.
No, go ahead. I'll let you take the lead.
Look, we need to be in the software business in order to be able to drive our transportation logistics business, and that's really the goal here. You know, we're not looking to be the software company in logistics and transportation. I think all the services that we provide create an immense amount of value, and that's really our focus. With the knowledge that we have, and this team has, and their folks, we can create some pretty amazing software because we know what is required. I think that's the goal. It's really continue to be an operating company that is providing outsourced services with some pretty amazing technology that can help us and give us an advantage.
Yeah. I would just say one thing to that. It's really interesting in our work with, you know, every startup that's developing technology doesn't have what we have, right? Customers, real operators, real expertise. I will tell you, we need to be focused on technology and developing it and creating it and creating value with it. Make no mistake, the value that comes to our customers is by having that great technology but marrying it with absolutely phenomenal operators that can take the value of what that's creating and actually implement it and execute it. That's the secret sauce really at the end of the day.
Terrific. Well, we're right at the top of the hour, so we'll leave it there. Our team will be around for questions for a while before people catch flights, so feel free to stop us in the hallway. Also wanna let you know, for those of you who are here in the room, there's some giveaway items on your way out at the registration desk, so don't be afraid to stop by and pick one up. Again, thank you so much for your time in coming today. We really appreciate your attention, and hopefully this has been an educational opportunity. Thank you again.