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#<UNK>, what we do is, again we are targeting large fleets and we'll negotiate with the given customer a labor rate and a parts rate and the labor rate is based on geography.
And once that's established we open up literally the entire network.
Now some of our shops are more prepared than others and that's exactly what we've been working on.
And then it gets down to working the change management if you will on a decentralized basis, where you get fleets comfortable with using our shops versus the vendors that they were using historically.
We liken it to what we did with national rental several years ago, where we would sign a national rental agreement and then you need to literally sell locally those customers to utilize your rental capability, even though you have a national headquarters negotiated agreement, you've got to drive demand locally and that's literally how it works with on-demand.
We find a national headquarters-driven agreement and then we need to get folks comfortable with our maintenance on a local basis, and that's exactly what we are doing.
You read our playbook.
We do just that.
We take units coming off the lease and we won't out service them; we'll put them in the rental fleet if they've got more life.
We will delay the out servicing of units, which we're very cautious of, because we've got demand, obviously, in the used vehicle side, and at the lower-end of the inventory target range that we've got.
But that's exactly what we do.
To increase units available for rental we'll do a lease to rental, so units coming off lease we'll put them in the rental fleet and we'll delay the out servicing of older pieces of equipment in the rental fleet.
<UNK> that's in the math already.
Used vehicle point of view, we've already factored that in.
Thanks <UNK>.
Well, in terms of where they get booked there is some that gets book in DTS and supply chain and it gets eliminated total.
But it all runs through FMS.
And in terms of what happened in the quarter, I'll just elaborate a little bit on that, is that there was a big drop in fuel pricing.
When there's a significant drop that quickly, usually wholesale prices drop quicker than retail.
We do have some of our customers that are on more of a market-based price, think about our rental customers and things like that, and we got a benefit, a one-time benefit I would say because of that rapid drop.
But we don't expect that to recur.
And typically when it goes the other way, retail moves up more quickly in line with wholesale.
I wouldn't say it's very meaningful.
It certainly had some benefit because of the disruption.
When things get a little hairier in our Business it usually gives an opportunity to show what we can do, and this was one of those cases.
No.
I wouldn't say it was a meaningful number and I'd say we really expect that to be primarily behind us going forward.
You have the right idea.
It's really increased demand, not only from on-demand but also from our new lease customers also have been driving that.
In terms of cross-selling opportunities, <UNK> do you want to go through some of the ---+.
As you have customers coming in for our maintenance, Matt, we also could sell them fuel, for example, and then as they get comfortable with the quality of our maintenance, they get to know us.
Then we look at contract maintenance and even selling up the full service lease, where maybe they weren't interested in it before.
It really is an opportunity for us to open up the door to that 90% of the market that doesn't outsource today and sell them on our variety of services.
Let me just give you an idea of where we're at and then I'll pass it over to <UNK> <UNK>.
One of the exciting drivers for growth in Dedicated for us has been the opportunity to upsell customers who are in full-serve lease to Dedicated.
We saw great activity in 2013, we saw, we had another great year actually beat 2013 in 2014 in terms of the amount of these collaboration type sales or upselling.
So we think there's still more opportunity to do even more.
And <UNK>'s team, along with <UNK>'s team are working collaboratively to find where we can help customers by having them outsource more of this activity, which in this case would include the driver to Ryder.
So we think we're still probably early in the process of continuing to grow that business.
It's not going to happen overnight.
It's going to be a multi-year effort, but I think now <UNK>'s team working with <UNK>' have got a lot of opportunity to continue to build on that.
So <UNK>.
<UNK>, this is <UNK>.
Just a few things to add there.
One of the things we continue to see is the macro trends out there in the industry are really helping us.
So if you look at the paying points around drivers, you look at the paying points around capacity, as well as safety performance for some of our prospects that continues to drive higher levels of sales activity for us.
So the pipeline has grown and continues to grow, but going back to what <UNK> said around collaboration, we do continue to see good momentum.
We've seen two consecutive years of increase growth from collaboration sales.
We expect that to continue in 2015, and as we gain momentum we'll see that continue to accelerate.
We've talked about one-third of our growth coming from private fleet conversions, I would tell you that a good chunk of that is really as a result of our TCO model or TCO tool.
Because what it does is it allows our salesperson to have a discussion around the facts with a customer that's an ownership, as opposed to an emotional discussion of what they think it should be versus what it is.
So there's a lot more of a fact-based discussion around what the ownership costs are versus what Ryder could potentially do the activity for.
And we're finding that we typically can find ways to bring value cost savings to customers early on, in addition to the incremental service.
So I would say that we are still early in the process in terms of continuing to leverage that tool, but we have seen meaningful benefits from it, certainly in 2014.
And I would tell you that a good portion of that growth business that's coming from ownership is as a result of the TCO tool.
So <UNK>, do you want to add to that.
I'd just add to your comments here, <UNK>.
That we found with our customers that as the acquisition price and the maintenance costs have increased for the new technology vehicle, this is becoming a more significant part of the cost base that our customers are seeing.
So you've got the finance departments and CFOs that are seeing this and are concerned about it.
And so when we come in and typically, historically had a sale to the transportation department of the Company, now we're elevating the discussion with the TCO tool to the CFO and the finance group, and as a result the dialogue is different than we've had in the past.
It's a richer discussion around the total cost of the vehicle.
We're seeing a lot of opportunities from ownership customers that we didn't see before.
Thanks <UNK>
Remember one-third of it is customers that are new to outsourcing and the rest of the two-thirds I would tell you, the larger percentage is with new customers.
On a net basis, our existing customer base, I would tell you is beginning to grow a little bit, but still not a meaningful part of the growth.
Because we're looking at 2.5% to 3% GDP growth.
I wouldn't expect there to be growth in the existing customers' fleets.
We've always said we're probably, along with the OEMs, we're looking at 3% to maybe 4% GDP growth before you would see something like that.
So I would say the majority of it is customers new to outsourcing and then new customers that we're winning from competition.
I'd say it's really across the board because remember, this campaign is an awareness campaign.
It's to help the market understand all the different services that Ryder offers.
If you look at total number of leads, the majority of them ---+ the larger percentage are going to go to FMS, but that's where the larger customer base in the market is.
It really is helping all three segments and helping to explain all the services that Ryder can offer and all the ways that we can help companies with their fleet management and supply chain activities.
So I would say it's really having an impact, from a lead standpoint it's having an impact across all three.
Thank you
That number fluctuates, but I will let <UNK> give you the stats of where we are at now.
<UNK>, if we look at what we call lease support and then we call it pure rental for customers, it's not related to lease support.
For first quarter 41% was for lease support and 59% was for the pure rental customers.
And we are seeing growth in both, so we are seeing demand for pure rental and for lease support and obviously the lease support is being driven by the lease fleet count that we discussed earlier.
But again 41%, 59% respectively.
It's in that target, that 40% to 60% range.
It could go to 30% or it could go the other way depending on how much demand we have from our lease customers.
Look at it from the standpoint of the first call, if you will, is with lease customers that we have a lease agreement and their using rental vehicles to support that.
The pure rental market is a very big market and we use that really, not only to grow as the market grows, but also to fill-in when vehicles are available from a lease customer.
Are you talking about on the rental fleet or lease fleet.
That could be a lot.
It could be mix.
If you look at our rate FX as another piece, our rate per vehicle and rental we know was up 5%.
That's just what we're charging per vehicle per day.
And then in terms of what else could be affecting it, it could be mix.
You could have more light duty or trailers versus trucks in any one period.
You could have some of that.
But other than that it's not something that we are honed in on or worried about.
Correct.
Rate per vehicle, per day in rental.
So if you think about what's the cost to rent a truck for a day, it is up 4%.
<UNK>, we're in the pilot phase still if you will on this, so we have a handful of customers, we're now 30 or 40 customers that we are dealing with.
This is one of the earlier customers and there's just been a volume drop off as they've done different things with different parts of their fleet.
It's not really something of much concern.
Our focus is really going after all the additional customers that we have added and bringing more of their vehicles into our facilities, and this customer over time could bring those vehicles back also.
Thank you.
Okay, thanks everyone for being on the call.
We're right near the top of the hour.
Hopefully you got a good flavor of where things are at.
It's a great quarter and things are looking pretty favorable for us at this point, so we're excited about the balance of the year.
Anyway hopefully see you in the next few months and have a safe day.
Bye-bye.
