Ryder System, Inc. Corporate Sustainability Report Published December 2011 Ryder System, Inc. Corporate Sustainability Report 2 4 5 7 8 10 11 12 20 25 30 35 A Message from Our Chairman and Chief Executive Officer Progress at a Glance Corporate Overview Business Segment Descriptions Strategy and Analysis Financial Highlights About This Report Environment Safety & Security People & Community Governance Ethics & Compliance A Message from Greg Swienton, Chairman and Chief Executive Officer Dear friends, Our Corporate Responsibility Report, first issued in 2008, covered Ryder’s history and dedication to corporate responsibility.We are pleased to follow up with this Corporate Sustainability Report covering our 2009 and 2010 performance. As you will see, we have made exceptional progress across many areas of our business. Ryder was recently named an Inbound Logistics Magazine Green Supply Chain Partner for the third consecutive year and included as a top company in the Newsweek Green Rankings for the second consecutive year.We have continued to research, test, and introduce new vehicle technologies that provide our customers with energy-efficient, low-emission solutions. We collaborated with equipment manufacturers, government agencies, and customers to launch a first-of-its-kind natural gas project for commercial heavy duty trucks in Southern California.We continue to invest in innovative technologies to ensure driver safety.Through the Ryder Charitable Foundation, we enhanced our national giving strategy by partnering with the American Red Cross as a member of its Annual Disaster Giving Program. Our employees also continue to give their personal time as volunteers in their communities. These are just a few examples of our commitment to corporate responsibility and sustainability. Looking forward, our sustainability strategy includes continuing our progress and driving innovation in the following areas: 4 optimizing the transportation and supply chain networks of our customers by using the most efficient modes and latest technologies; 4 reducing emissions from our vehicles and water consumption at our facilities; 4 continuing to evaluate and improve our industry-leading safety and security processes and training throughout our organization; Ryder signed its first lease customer in 1938 Ryder was founded by Jim Ryder in 1933 2 4 increasing employee volunteer engagement with charitable organizations; and 4 tracking and measuring progress in diversity hiring, and employee training and development. At Ryder, we believe that maintaining high standards for governance and ethics, operating with integrity in our business practices, and enhancing employee engagement will lead to exceptional performance.We go beyond what is required to ensure that we work toward the greatest good for our key stakeholders: customers, employees, suppliers, and investors. Our actions and investments continue to demonstrate our commitment to achieving results the right way, while also serving as involved members of the communities where we live and work. As a leading provider of transportation and logistics solutions, our stakeholders expect us to be stewards of real-world efficiency and sustainability. We take this expectation seriously in all that we do and we will continue to deliver on our promises with character and accountability. Our Ryder team welcomes your feedback on our performance, and we invite you to follow us on Facebook, Twitter and YouTube. Thank you for reading this report, and for your interest in Ryder. Greg Swienton Chairman and Chief Executive Officer Ryder System, Inc. In 1945, Ryder signed its first Dedicated Contract Carriage account 3 Progress at a Glance Focus Area Environment Accomplishments Looking Forward Improved Carbon Disclosure Project score each reporting year and expanded disclosures to include Scope 1, 2, and 3 emissions. Significantly expanded carrier participation in the U.S. EPA SmartWay® Transport Program. Signed agreement to implement first-of-its-kind natural gas project for commercial heavy duty truck lease and rental fleets in Southern California. Expanded natural gas vehicle capability to Arizona and Michigan in 2011. Reduced energy and water consumption in U.S. and Canada operations. Safety & Security Ranked as a top U.S. company for security practices in the Transportation, Logistics, Supply Chain, and Warehousing industry sector in the 2009 and 2010 Security Benchmarking Survey, published in Security Magazine. Completed C-TPAT border security certification for Ryder Supply Chain Solutions Asia. Conducted over 192,000 online safety training lessons. Launched a Sleep Apnea Wellness program to reduce the effects of fatigue among Ryder drivers with this condition. Continued to leverage cutting-edge onboard vehicle technologies to reduce collisions and improve safe driving behavior. People & Community Selected the American Red Cross as Ryder’s national charitable partner and became a member of the Annual Disaster Giving Program. Redesigned leadership competency model to be the basis for decision making related to hiring, performance assessments and professional development. Launched a Diversity & Inclusion Council, Mentoring Program, and Diversity Scorecard linking executive pay to diversity goals. Governance, Ethics & Compliance Recognized by GovernanceMetrics International (GMI) in 2010 as one of The 20 Most Responsible Companies. Received GMI’s highest overall rating, a perfect 10, for corporate governance and corporate behavior. Created the role of a strong lead independent director to facilitate and strengthen Ryder’s Board of Directors’ independent oversight of the company and to uphold effective governance standards. Appointed a Chief Privacy Officer to oversee and manage the company’s data privacy and security processes and procedures. Conducted more than 12,000 online compliance training lessons around the world in 2009 and 2010. 4 } } } } Continue to optimize the transportation and supply chain networks of our customers by using the most efficient modes and latest technologies. Continue to reduce emissions, energy, and water consumption for Ryder owned and operated facilities and vehicles. Continue to identify opportunities to replicate Ryder’s natural gas project model in other municipalities across the U.S. Launch and implement updated Security Management Fundamentals training for supply chain employees. Continue to support increased collaboration between government agencies and the private sector to improve transportation security. Implement updated safety processes and training throughout all maintenance locations servicing alternative fuel vehicles. Increase total employee volunteer engagement with the American Red Cross and other charitable organizations in the U.S. Continue to identify critical talent gaps and implement programs, processes, and technologies to track and help fill those gaps. Continue to track and measure progress against diversity hiring, development, and training goals. Continue compensation policies strongly focused on pay-for-performance principles, including annual "Say-on-Pay" vote by shareholders. Enhance and expand online compliance training to improve access for hourly employees. Evaluate ethics and compliance programs to benchmark against best practices and to maximize effectiveness. Corporate Overview Our Mission: Ryder is committed to being the leading provider of outsourced transportation and logistics solutions in our target markets. We strive to provide exceptional service to our customers and achieve superior results for our shareholders through our guiding principles and core values. Ryder System, Inc. is a FORTUNE® 500 provider of leading-edge transportation, logistics, and supply chain management solutions. Ryder's product offerings include: Fleet Management Solutions, which provides leasing, rental and programmed maintenance of trucks, tractors and trailers to commercial customers; Supply Chain Solutions, which manages the movement of materials and related information from the acquisition of raw materials to the delivery of finished products to end-users; and Dedicated Contract Carriage, which provides a turn-key transportation service that includes vehicles, drivers, routing, and scheduling. Ryder serves customer needs throughout North America, Europe and Asia. Our Guiding Principles our commitment to training and 4 Our commitment to enhancing development, as well as diversity, long-term value is achieved by we expect to have the best and operating the business profitably, most passionate people in the responsibly, and ethically. industry. 4 Our success depends on our 4 Our high ethical standards also ability to deliver consistent ensure that we operate the superior service and solutions business in a safe and environwhile being innovative and mentally responsible manner. responsive to customers’ needs. 4 Our people provide us with the competitive edge, and through Ryder pioneered the practice of preventive fleet maintenance in 1949 by opening service locations to keep fleets moving Ryder System, Inc. incorporates as a public company in 1955 and is listed on the New York Stock Exchange in 1960 5 Global Organizational Profile Headquarters Miami, Florida, USA Total Employees 25,900* North America 24,600 Europe 1,000 Asia 300 Number of Operations/Locations 810 fleet management operating locations in U.S., Canada, UK, Germany Over 28 million square feet of warehouse space (in North America and Asia) leased and operated Total Vehicles Maintained 182,100 Our Core Values 4 Integrity ensures we achieve the desired results the right way. 4 Our leadership competencies center on good character, judgment, relationships, and results. 4 Collaboration enables us to unleash our collective potential. 4 Quality performance and services ensure we deliver on our promises, and our customers can truly “rely on us.” Corporate Strategies Fleet Composition Full Service Lease Vehicles 119,600 Contract Maintenance Vehicles 32,900 Rental Vehicles 40,500 Total Customers Full Service Lease 12,600 Contract Maintenance 1,400 Commercial Rental 14,000 Supply Chain/Dedicated Contract Carriage 624 Ticker Symbol R Common Stock Exchange Listings New York Stock Exchange Component of Dow Jones Transportation Average Standard & Poor’s 500 Index * As of December 31, 2010 Becoming one of the first transportation companies to purchase a UNIVAC computer in the 1950s, Ryder ushers in the computer age 6 4 Be recognized by customers as the premier provider of outsourced transportation solutions in our target markets by performing these functions more efficiently and cost effectively than they could themselves. 4 Accelerate growth through exceptional operational execution, introduction of new products/ services, and targeted acquisitions. 4 Develop an enhanced innovation culture to further capture long-term, profitable growth opportunities. 4 Attract, develop, and retain the most capable talent, allowing employees to maximize their potential. In 1957 Ryder goes international by expanding truck leasing and rental operations into Canada Business Segments Fleet Management Solutions (FMS) FMS provides full service leasing, contract maintenance, contract-related maintenance, and commercial rental of trucks, tractors and trailers to customers principally in the U.S., Canada and the UK. Through the FMS business, Ryder provides customers with flexible solutions designed to improve their competitive positions by allowing them to focus on their core business, lower their costs, and redirect capital to other parts of their business. Our solutions also enable customers to improve the uptime and reliability of their fleets, thereby minimizing fleetrelated business disruptions and risks. Ryder's FMS product offering is comprised primarily of contractual-based full service leasing and contract maintenance services. The company also offers transactional fleet solutions including commercial truck rental, maintenance services, and value-added fleet support services such as insurance, vehicle administration, and fuel services. In addition, we provide our customers with access to a large selection of used trucks, tractors, and trailers through our used vehicle sales program. Supply Chain Solutions (SCS) Ryder’s SCS business offers a broad range of innovative lead logistics management services that are designed to optimize a customer's global supply chain by directing the movement of materials, funds, and information from the acquisition of raw materials to the delivery of the finished product to the end-user. The SCS product offering is organized into three categories: professional services (strategy, design, and engineering), distribution operations (warehousing), and transportation solutions. Ryder’s solutions help companies dramatically improve service and speed to market. Our deep expertise in key industry verticals paired with unprecedented operational excellence help our customers meet their unique challenges and realize measurable ROI. Ryder is recognized as a leader in transportation by Business Week in 1959 Dedicated Contract Carriage (DCC) Ryder’s DCC solution combines the equipment, maintenance, and administrative services of a full service lease with drivers and additional services to provide a customer with a dedicated transportation solution that is designed to increase their competitive position, improve risk management, and integrate their transportation needs with their overall supply chain. Such additional services include routing and scheduling, fleet sizing, safety, regulatory compliance, risk management, technology, and communication systems support. Ryder's DCC solution offers a high degree of specialization to meet the needs of customers with high service requirements such as tight delivery windows, high-value or time-sensitive freight, closed-loop distribution, and multi-stop shipments. Ryder expands operations to the United Kingdom in 1971 7 Strategy and Analysis Ryder’s Business Model Transformation During the past decade, Ryder has made substantial changes to our business model that have helped position the company for long-term, sustainable, profitable growth. Our contractual based business has increased from 43% of revenue in the early 1990s to 90% currently, reducing our sensitivity to shorter-term, cyclical business trends. Foundational process changes, such as centralized asset management, improved contract terms and enforcement, vehicle procurement/disposition processes, and appropriate metrics and incentives have provided significant savings to our cost structure. Enhanced and focused sales and marketing capabilities enable us to better leverage long-term outsourcing trends. Our strong financial foundation and access to capital provide us with the ability to support organic growth, acquisitions, and strategic investments. The strength of the new business model also enables Ryder to deliver increased and positive free cash flow over an economic cycle. Sustainable Implications We believe that our business objectives and sustainability goals are not mutually exclusive. Companies select Ryder so that they can benefit from best practices that improve the efficiency and cost effectiveness of their operations. Many of these practices also present opportunities to make a positive impact on a business’ carbon footprint. The solutions we implement for customers are part of an overall strategy to improve transportation efficiencies. Examples of these solutions include preventive vehicle maintenance, technologies to optimize routes and reduce idling, and driver training techniques to reduce fuel consumption, as well as alternative fuel options and logistics engineering strategies that optimize distribution networks to reduce miles. These activities and solutions all have associated environmental and economic benefits. Marketplace Opportunities The transportation and logistics markets present significant growth opportunities, and Ryder is increasingly well positioned to benefit from major trends currently driving and shaping the future of our industry. These include: increasing complexity of vehicle technology and maintenance requirements; new regulatory and emissions standards; tighter capital availability; the continuous need of manufacturers to optimize global sourcing and supply chain networks; and increased demand for timely, technologydriven information tools related to businesses’ transportation functions. In addition, as a result of the most recent economic downturn, many companies delayed fleet replacement decisions, resulting in pent-up marketplace demand to update a North American fleet that is currently the oldest in recent history. These trends create an environment for Ryder implements North America’s first large scale Just-In-Time supply delivery system supporting a new auto plant in Kentucky in 1989 meaningful growth in our business, as well as opportunities for employees to grow their careers and share in the rewards of Ryder’s success over time. Now more than ever, our largest marketplace opportunities for growth also present us with the greatest opportunity to positively impact the overall sustainability of the transportation industry.The addressable private fleet market in the U.S. and Canada represents 5 million vehicles.Those businesses that do not outsource transportation operations represent 4.2 of those 5 million vehicles on the road. Many of these private fleets are owned and operated by small businesses that do not have the infrastructure, manpower, tools, and technologies to operate their fleets at optimum efficiency. Nor do they have the expertise to measure and track the environmental impact of their transportation operations. These factors create a compelling reason for more companies to outsource transportation and supply chain management to an experienced provider. At Ryder, we are not only well positioned to meet this growing demand, but we can do so while having a positive impact on the environment. Due to the nature of our business, we provide the highest-quality, cost-effective, outsourced transportation and logistics solutions and are able to extend the benefits of our environmental expertise, practices, and infrastructure to those businesses that might otherwise not have access to this level of resources. Security magazine named Ryder’s head of Corporate Security as one of the industry's "Most Influential" in 2011 Click Here to Learn More 4 8 Strategy and Analysis Business Strategy Our Fleet Management Solutions business strategy is to be the leading leasing and maintenance service provider for light, medium, and heavy duty commercial vehicles. We will accomplish this through several goals and priorities, including: 4 Improving customer retention levels. 4 Implementing sales growth initiatives for our contractual product offerings with a focus on the conversion of private fleets and commercial rental customers to full service lease customers. 4 Optimizing asset utilization and management. Acquisitions play an important role in enhancing our growth strategies in the U.S., Canada, and the UK. From 2008 through 2011, we completed seven FMS acquisitions through which we acquired vehicles and contractual customers and then applied our business processes and standards across the new operations. Our Supply Chain Solutions business strategy is to offer our customers functional execution and proactive solutions based on our expertise in this area. This strategy revolves around several goals and priorities, including: 4 Further diversifying our customer base through expansion. 4 Developing services specific to the needs of the retail and consumer packaged goods (CPG) industry. 4 Creating a culture of innovation that fosters new solutions for our customers’ supply chain needs. 4 Training and developing employees to share best practices and improve talent. The 2010 acquisition of Holland, Michigan-based Total Logistic Control (TLC), an independently run, wholly owned subsidiary of SUPERVALU, expanded our Supply Chain Solutions offering with firmly established, comprehensive food, beverage, and CPG capabilities. Our Dedicated Contract Carriage business strategy focuses on customers who require specialized equipment, handling, or integrated services. This strategy includes: 4 Increasing market share with customers in targeted industries. 4 Leveraging the support and talent of our FMS sales team to develop joint sales programs. 4 Aligning the DCC business with other SCS product lines to create revenue opportunities and improve operating efficiencies in both segments. Toyota recognized Ryder as its 2010 Carrier of the Year Ryder selected by Inbound Logistics magazine readers as a Top 3PL in 2011 Click Here to Learn More 4 Click Here to Learn More 4 9 Financial Highlights In millions Ryder System,Inc. $ 5,599 05 2010 Dollars in millions 2009 2008 $ 06 Operating Overview: Revenue $ 5,136 $4,887 $ 5,999 Operating revenue (1) $ 4,158 $4,063 $4,590 Earnings from continuing operations before income taxes $ 186 $ 144 $ 409 Comparable earnings from continuing operations before income taxes(1) $ 189 $ 157 $ 432 Earnings from cont. operations $ 125 $ 90 $ 258 Comparable earnings from continuing operations (1) $ 117 $ 95 $ 267 07 $ 08 $ 118 $ 62 $ 200 Dollars in millions 6,363 $5,999 $4,887 09 10 Net earnings 6,136 $5,136 Revenue In millions $ 05 221 229 $ $ 244 247 06 $ Financial Data: $ 07 Total assets $6,652 $6,260 $6,690 Total debt $ 2,747 $2,498 $ 2,863 Shareholders’ equity $1,404 $ 1,427 $267 258 08 $ $ 1,345 $ $ 95 90 09 Return on average shareholders’ equity 8.4% 4.4% 11.2% $ 10 Adjusted return on average capital (1) Debt to equity Free cash flow (1) $ Capital expenditures paid 4.8% 4.1% 7.3% 196% 175% 213% 258 $ 1,070 $ 614 $ 652 $ 248 252 $ 117 $125 Earnings from continuing operations 341 Dotted bars represent comparable earnings from continuing operations (1) $ 1,230 Per Common Share Data: Per Share $ 05 Earnings from continuing operations – Diluted $ 2.37 $ 1.62 $ 4.51 $ 3.94 3.99 06 Comparable earnings from continuing operations –Diluted (1) $ 2.22 $ 1.70 $ 4.68 Net earnings – Diluted $ 2.25 $ 1. 11 $ 3.50 Book value $ 27.44 $26. 71 $ 24.17 3.41 3.53 $ $ 4.13 4.19 $ 07 $ $4.68 4.51 08 $ Cash dividends $ 1.04 $ 0.96 $ 0.92 $ $ 1.70 1.62 09 Other Data: $ Common shareholders of record 9,192 Common shares outstanding 51,174,757 (2) 9,482 9,713 2.22 2.37 10 $ 53,419,721 55,658,059 Number of vehicles managed 182,100 186,800 198,900 Number of employees 25,900 22,900 28,000 Earnings per diluted common share from continuing operations Dotted bars represent comparable earnings per share from continuing operations (1) 1 Represents a non-GAAP financial measure – for details of this measure and a reconciliation to the GAAP measure, please refer to “Overview”, “Financial Resources and Liquidity” and “Non-GAAP Financial Measures” discussion presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Annual Report. 2 Includes our global fleet of owned and leased vehicles, as well as vehicles under contract maintenance agreements. 10 About This Report his report highlights Ryder’s progress towards improving the communities and environments where we do business. Information in this report is for 2009 and 2010 (except where noted), primarily for our operations in the U.S. and Canada. Information and data disclosed in this report is consistent with the performance indicators provided by the Global Reporting Initiative versions G3 and G3.1. Information on GRI can be found at www.globalreporting.org. We believe that the information presented here is an accurate and fair representation of our corporate sustainability programs and results.This report has been reviewed and approved by Ryder senior management. Questions and comments about this report can be sent to [email protected]. Logistics Management magazine recognized Ryder with a 2011 Quest for Quality award Ryder named 2011 Best Service Logistics Supplier by Cisco Click Here to Learn More 4 Click Here to Learn More 4 11 Ryder is committed to implementing industry-leading environmental practices that reduce risk, drive operational efficiency, and deliver value to our customers.We are continually integrating sustainability indices into the supplier selection process to ensure we are partnering with responsible parties and will continue to give our customers access to the most innovative, environmentally sound solutions. Implemented natural gas project for commercial heavy duty truck fleets in Southern California, deploying 202 natural gas vehicles Click Here to Learn More 4 12 Ryder Europe is specifying LED rear light clusters on all new trucks, which have a lifetime rating of 100,000 hours compared to 800 hours for regular bulbs Our environmental strategy is focused on reducing emissions and waste, as well as identifying alternative vehicle technologies and fuels that can be cost-effectively deployed in our customers’ operations. Ryder’s Group Director of Environmental Services and Sustainability reports through the company’s Chief Legal Officer. Within each operating business unit, environmental oversight responsibilities are assigned to facility and area operating managers as part of their regular duties. As Environmental and Emergency Coordinators, these front line managers are responsible for employee training, implementing policies, and environmental compliance at their location. At least once per year, the Corporate Governance and Nominating Committee of our Board meets with our Environmental ENVIRONMENTAL POLICIES AND MANAGEMENT SYSTEMS 4 Implement procedures that routinely evaluate and revise objectives based on identified environmental impacts and performance. Ryder EMS establishes the basis for customer-specific EMS programs that conform to the ISO standard. Based on individual customer needs, select Ryder locations have achieved certification to the ISO 14001 standard. We have achieved ISO 9001 and 14001 certifications at several customer sites, including locations in the UK, Mexico, and Canada. “Ryder is dedicated to developing and implementing effective environmental practices in all of its business Environmental management plays a key role in business planning at all levels of Ryder’s organization.This ensures that environmental policies are fully integrated into our business process. In 1991, before “green” became a business buzzword, Ryder adopted a corporate Environmental Policy and implemented specific management programs designed to create sustainable solutions and value for our company and our customers. This Policy, which is updated periodically to reflect changes in our business, established baseline standards for all of our businesses worldwide and serves as the cornerstone of our overall environmental philosophy of continuous improvement. To support employees and managers in meeting environmental goals, an Environmental Policy and Control Manual has been developed and distributed to our operations worldwide. This manual defines corporate policies and provides step-by-step guidance for implementing environmental management practices. Our commitment to developing responsible environmental practices is shared by employees at all levels of the company. activities, and to continually monitoring these practices to identify opportunities for improvement.” From Ryder System, Inc. Environmental Policy 4click here for more information Services department to discuss environmental issues and initiatives, including a review of key operational data impacting the environment, legislative and regulatory initiatives, energy conservation, and carbon reduction strategies for Ryder facilities and operations. Our Environmental Management System (EMS) incorporates elements of the global ISO14001 environmental management standard along with other environmental best practices that are unique to our operations and services. Ryder’s EMS is designed to: 4 Identify and control environmental impacts associated with business activities. 4 Improve environmental performance continually. Improved Carbon Disclosure Project Score from 50 to 83 in 2011 and expanded scope of disclosures to include all Scope 1, 2, and some Scope 3 emissions Ryder recycles virtually all automotive waste streams from our maintenance facilities Expanded EPA SmartWay® Transportation partnership efforts by providing customers with detailed information on total carbon footprint and CO2 per ton/miles Click Here to Learn More 4 13 Environmental Auditing and Due Diligence To ensure compliance with established policies and procedures, annual environmental self-inspections are required at each of our locations. Inspection results are verified by the Ryder Environmental Services team which audits all of our locations to ensure environmental accountability throughout our operations. Audits are scored and corrective action plans are required within 30 days of completing the audits. As part of our due diligence for property acquisitions and dispositions, lease renewals and terminations, and company acquisitions or sales, we perform more than 600 audits and approximately 300 environmental investigations each year. These due diligence investigations are part of our comprehensive process for evaluating potential risks. VEHICLE EMISSIONS AND FUEL TECHNOLOGY With best-in-class vehicle technologies, maintenance, and fueling services, we provide our customers with the latest fuel and vehicle emission technologies that ensure maximum performance, optimum fuel conservation, and reduced carbon emission outputs. Onboard technologies like RydeSmart® help fleets reduce fuel consumption and emissions U.S. EPA SmartWay® Transport Partnership Ryder is committed to tracking and measuring vehicle emissions through our participation in the U.S. EPA SmartWay® Transportation Partnership. SmartWay is a voluntary public/private partnership designed to improve vehicle fuel efficiencies and thereby reduce greenhouse gas emissions. Ryder is a SmartWay Carrier partner for Ryder-owned vehicles and a Logistics Partner for our supply chain operations. 4 SmartWay® carriers accounted for 92% of all freight miles managed by Ryder in 2010 versus 90% in 2009 and 86% in 2008. 4 SmartWay® carriers accounted for 77% of all freight tons managed by Ryder in 2010 versus 72% in 2009 – an increase of 5% year over year. Vehicle Emissions Reduction Technology Ryder’s RydeSmart® telematics technology is designed to help customers improve vehicle operations and lower operating expenses including fuel costs. RydeSmart is deployed in approximately 10,000 leased vehicles and 11,000 rental vehicles, helping fleet managers achieve a 10 to15% reduction in fuel consumption through improved routing and reduction of unauthorized idle time. Estimated emission reductions associated with our customers’ use of RydeSmart is over 12,600 tons of CO2 annually. For more information visit www.RydeSmart.Ryder.com online. Ryder customers also have access to our proprietary fleet management and diagnostic technology, FleetCare. This tool provides customers with immediate web-based access to fleet data to help transportation managers analyze trends and recognize opportunities for increased efficiencies. In addition, for customers who employ their own drivers, Ryder provides online driver training programs through Ryder Pro-TREAD. This system includes courses that improve driving skills and performance, and teaches drivers simple techniques to reduce fuel consumption. Companies can access driver training through Pro-TREAD at www.rydersafetyservices.com. Fuel Efficiency and Emission Reduction In 2010, we committed to offering Diesel Exhaust Fluid (DEF) at every full service Ryder location in North America to support our customers who operate vehicles that use Selective Catalytic Reduction (SCR) technology to meet 2010 emission standards set by the U.S. EPA. DEF is a non-toxic solution that is required to maintain proper operation of model year 2010 and later vehicles using SCR to convert nitrogen oxide in the exhaust to harmless nitrogen and water vapor. DEF is now available at all 550 Ryder service locations in the U.S. In anticipation of In 2010, Ryder Europe delivered its first leased 10-ton electric truck to London-based customer, Bunzl, for use in the catering and hospitality sector. This truck has been designed specifically for stop-start travel and will have a maximum range of approximately 80 miles. Trials show that one charge can last for up to three days. Launched alternative fuels website to help customers and fleet owners reduce transportation costs and understand the advantages of natural gas, hybrid, and electric vehicle technologies Recognized as an Inbound Logistics Green Partner for three consecutive years Click Here to Learn More 4 Click Here to Learn More 4 14 increasing DEF demand, bulk storage and DEF pumps are being added at our largest shop facilities throughout North America. We continue to offer RydeGreenSM, a line of tractors and trailers, designed to reduce fuel consumption and greenhouse gas emissions. The tractors are equipped with SmartWay® Verified Technologies eligible for the U.S. EPA SmartWay® Designated Tractor certification. Ryder’s RydeGreenSM Hybrid is a medium-duty straight truck that has the potential to provide up to 30 to 40% improved fuel efficiency in standard in-city pickup and delivery applications. Diesel emissions are dramatically reduced when the vehicle is operating in hybrid mode on battery power. Fuel Storage and Compliance Ryder Fuel Services, a wholly owned subsidiary of Ryder, performs remote monitoring and compliance management for more than 2,200 Ryder- and customeroperated fuel storage tanks, 24 hours a day, 365 days a year. RYDER’S COMMITMENT TO ALTERNATIVE FUELS As the leader in commercial truck full service leasing, we have the unique ability to influence and reach a broad and diverse base of customers and to increase access to alternative fuels and state-of-the-art vehicle technologies on a national level. As a result, in April 2010, the San Bernardino Associated Governments Board selected Ryder as its fleet For every gallon of diesel fuel that is not burned when a hybrid truck is in battery mode, 22.2 pounds of CO2 emissions are avoided. partner in a groundbreaking heavy-duty natural gas truck rental and leasing project in Southern California. The $38.7 million project is being funded as part of a joint public/private industry partnership between the U.S. Department of Energy, the California Energy Commission, and Ryder. State and federal sources will provide $19.3 million of the total project funding, including $9.95 million from the U.S. Department of Energy’s Alternative Fuel and Advanced Vehicles Pilot Program funded through the American Recovery and Reinvestment Act of 2009 (ARRA), and $9.3 million via the California Energy Commission’s Alternative and Renewable Fuel & Vehicle Technology Program. Demonstrating Ryder’s strategic When fully implemented, this project will: 4 Replace more than 1.51 million gallons of diesel use annually with 100% domestically produced low-carbon liquefied and compressed natural gas. 4 Contribute to the maintenance and creation of more than 400 U.S. green automotive jobs. 4 Reduce more than 9.2 million pounds of greenhouse gas emissions per year. 4 Reduce more than 131 tons of nitrogen oxide emissions annually. 4 Completely eliminate 2.65 tons of diesel particulate emissions from local neighborhoods. NOTE: Estimates based on California’s Carl Moyer program guidelines. commitment to alternative fuels, the company is committing $19.4 million of our own capital to the project. This is the first time that natural gas trucks have been deployed into a large commercial truck leasing and rental operation, making natural gas vehicles accessible to a variety of businesses that might otherwise lack the resources to invest in newer technology. The project will make available 202 heavy-duty natural gas powered trucks, including both liquefied and compressed Ryder Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) tractors natural gas (LNG and CNG) configurations. These ultra low-emission trucks have been deployed into our Southern California operations network, where our customers can access them through short-term rentals, long-term leases, or through our dedicated logistics services.To support these trucks, we are constructing two new natural gas refueling stations within the region and will work with our customers to identify and leverage the existing natural gas refueling infrastructure already located throughout Southern California. As part of our core product offering, we will maintain the vehicles at three strategically located maintenance shops in Orange, Rancho Dominguez, and Fontana, Calif. Each maintenance facility will be properly equipped for the indoor repair of natural gas vehicles. With natural gas fuel prices trending significantly and consistently lower than Supply & Demand Chain Executive Green Supply Chain Award (2009/2010) Ranked in the top 250 U.S. companies in the 2010 and 2011 Newsweek Green Rankings Click Here to Learn More 4 Click Here to Learn More 4 15 diesel fuel, our customers who incorporate natural gas vehicles into their fleet have the opportunity to realize additional cost savings. In 2011, in response to customer interest and demand, Ryder expanded its natural gas vehicle capabilities into Arizona and Michigan. WASTE MANAGEMENT We are dedicated to proactive waste management practices with onsite and offsite recycling and reuse technologies. Typical wastes generated by our operations are those associated with vehicle maintenance and fueling activities. Automotive Waste Streams We operate approximately 760 vehicle maintenance facilities throughout the U.S. and Canada. Our state-of-the-art waste management programs ensure that most waste streams in our shops are recycled. waste management programs, as well as re-use and continuous-use technologies whenever possible. Waste Recycling & Reuse In 2010, Ryder began distributing re-refined motor oil to 200 Fleet Management Solutions locations in the U.S. The motor oil is collected from oil change locations including Ryder shops, then processed at refineries and redistributed. This new oil meets all API standards, is supported by all engine manufacturers, and will not have a negative effect on maintenance or degrade optimum performance of our vehicles. In addition, the new oil requires less energy to manufacture than virgin stock from crude and results in reduction of greenhouse gas and metal emissions. Our recycling best practices include: than a new tire, consume less energy in the manufacturing process, and save on landfill space because fewer tires require disposal.The energy needed for a retread is estimated to be 70% less than what is required to manufacture a new tire. We use more than 600,000 tires annually, nearly 50% of which are retreads. 4 Recycling more than 50,000 automotive batteries annually. 4 Recycling all parts cleaning solvents, automotive fluids, and refrigerants. 4 Donating or recycling all used electronic equipment. Automotive Waste Stream Recycling Summary Year 2006 2007 2008 2009 2010 Volume1 (Gallons) CO2e Metric Tons Avoided2 Passenger Vehicle Emissions Equivalent3 Tree Conservation Equivalent3 4,859,624 4,413,238 4,440,991 4,079,779 4,116,341 25,590 23,930 23,810 22,332 21,693 5,086 4,577 4,554 4,271 4,139 689,113 620,174 617,067 578,754 560,798 1) Total volume of oil, oily water, automotive waste filters, and solvents recycled. 2) Metric tons avoided through closed loop recycling of used oil and solvents versus burning for one-time energy use. 3) Equivalents from EPA Calculator (CO2e) 9-2010, www.epa.gov/cleanenergy/energy-resources/calculator.html. Through partnerships with vendors and the implementation of technologies designed to better manage and maintain vehicles, we have achieved significant reductions in several vehicle-related waste streams. We recycle virtually all automotive waste streams, such as used oil, oily water, used oil filters, and used solvents. We have reduced the amount of waste we generate year over year by implementing aggressive 4 Crushing used oil filters prior to recycling, which reduces the number of collections at each location. (We recycle almost 10,000 drums of used filters annually.) 4 Using retread tires. (Retread tires use the original tire casing and replace the worn tread with a new tread while still delivering the same performance and safety.) These tires require significantly less oil to produce Ryder peforms more than 600 environmental audits each year Vehicle Washing - Waste Water Recovery Vehicle washing is performed daily at most Ryder facilities. All vehicle wash services are performed in accordance with our aggressive reuse and recycling policies to ensure vehicle waste water is handled appropriately in accordance with all environmental regulations, and is collected and treated prior to disposal or recycling. More than 2 million gallons of vehicle wash water are collected annually from vehicle wash operations. Spill Response We have established standardized emergency response procedures to ensure immediate response to all vehicle and facility spills and releases.We use an emergency spill response center to expedite the dispatch of emergency spill response teams to spill sites Significantly expanded carrier participation in the U.S. EPA SmartWay® Transport Program 16 anywhere in the U.S. All Ryder trucks are equipped with a Ryder Vehicle Spill Kit which provides the driver with everything needed for fast and effective spill response. Customized kits are also available for our customers. Technology Asset Waste Streams The disposal of technology assets (computers, monitors, keyboards, scanners, printers, etc.), if not managed carefully can result in Paper and Cardboard Recycling Results: 2008: Ryder recycled more than 3,800 tons of office paper and cardboard, resulting in a total reduction of more than 2,600 tons of greenhouse gas emissions. 2009: Ryder recycled more than 3,400 tons of office paper and cardboard, resulting in a total reduction of more than 2,400 tons of greenhouse gas emissions. 2010: Ryder recycled more than 5,800 tons of office paper and cardboard, resulting in a total reduction of more than 4,000 tons of greenhouse gas emissions. Electronic Waste Stream Recycling Summary: Year Tons Recycled 2008 62 2009 56 2010 34 keeps toxic materials out of landfills and also avoids emissions that are released during manufacturing of new products. By maximizing the useful life of electronic equipment, Ryder has reduced disposal costs and extended the life cycle of equipment. E N E R G Y C O N S E R VAT I O N Reducing Energy & increased costs, risks, and environmental Water Consumption impact. To manage this impact, we recycle We have stepped up our all retired electronic components and efforts to manage energy use component parts at all of our locations in and reduce greenhouse gas the U.S. and Canada. Electronic components emissions to become even more sustainable. are fully evaluated prior to end-of-life Consistent with our long-standing destruction to ensure all reuse and redecommitment to operational efficiency and ployment options are exhausted, thereby maximizing the useful life of the Employee conservation awareness campaigns combined with strategic equipment and green building upgrade program have helped reduce energy use at Ryder. reducing overall 2008 2009 2010 technology lifecycle costs and Electric emissions.We (Kilowatt Hours) 175,468,594 169,206,171 161,815,807 partner with Gas national and (Million Cubic Feet) 661,279 624,563 603,143 regional recycling Water and reuse compa(Million Gallons) 377,187 341,761 348,728 nies to collect and dismantle electo using resources as efficiently as possible, tronic components including glass, mercury, we are measuring and reporting our and hazardous materials, to ensure that electronic scrap material does not end up in a electricity, natural gas, water, and sewer use landfill. E-waste recycle partners are compliant for all North American operations. Improving energy efficiency is central to our carbon with U.S. EPA Responsible Recycling reduction strategy and the sustainable Standards and/or E-Standards Recycling solutions we provide to our customers. Program Standards. Recycling electronics We are continually updating and improving Energy Conservation Checklists designed specifically for our facilities in the U.S. and Canada that include best practices for facility management, lighting, and atmospheric controls.These tools offer noto low-cost tips for saving energy. Low cost improvements and aggressive management can deliver significant returns and environA Ryder maintenance facility mental benefits.We’ve found that even simple RydeSmart® helps customers reduce fuel consumption by 10 to 15% Click Here to Learn More 4 Ryder hosted Safety & Fuel Conservation Seminars back in the 1960s, before these concepts became buzz words 17 electricity conservation management practices can easily achieve 3 to 5% savings. Some examples include: 4 Replacing manual thermostats with locking, programmable thermostats and setting thermostats to 68 degrees in the winter and 76 degrees in the summer. 4 Installing timers or sensing controls on all non-security lighting at fuel islands, washbays, and storage areas. 4 Routine inspection and replacement of weather stripping on doors and caulking around windows every three years to prevent heating and cooling loss. 4 Routine maintenance on heating and air conditioning systems, replacement, and cleaning filters regularly. Green Building Upgrades Beginning in 2009, Ryder embarked on a project to convert lighting in our FMS facilities to more luminaire and energy efficient technology.The project targeted older buildings first, replacing old metal halide fixtures that have a lumens/watt rating of 3.51, with newer fluorescent lamp assemblies that have a lumens/watt rating of 65.8. In effect, the fluorescent lamp assembly, specified by Ryder, provides 23,085 lumens compared to 15,876 lumens from comparable metal halide fixtures – an improvement of 45%. This resulted in significantly improved average light levels in the maintenance technician workspace. In addition to being much more efficient on lumens per watt, we have realized substantial benefits on energy conservation. Average annual energy consumption for facilities equipped with metal halides is 74,793 kilowatt hours. After the conversion, energy consumption dropped to 53,492, a reduction of 28.5%. These energy conservation results translate directly into a reduced carbon footprint. We are also prioritizing energy efficient and sustainable solutions for our Supply Chain Solutions distribution centers. Improvements include the installation of skylights to take advantage of natural lighting, fluorescent fixtures to improve energy efficiency, and motion and daylight sensors. Ryder continues to place a high priority on energy conservation in new site selection criteria. Carbon Disclosure Project The Carbon Disclosure Project (CDP) is an independent not-for-profit organization holding the largest database of corporate climate change information in the world. Thousands of organizations from across the world’s major economies measure and disclose their greenhouse gas emissions and climate change strategies through CDP. Ryder has voluntarily responded to the Carbon Disclosure Project annually since 2008. In 2009, the CDP introduced a performance component to the reporting by scoring CDP responses. In 2010, this performance scoring process was rolled out broadly. The disclosure score reflects the comprehensiveness of a company’s response in terms of the depth and breadth of its answers. We have consistently improved our CDP score each year, receiving a 50 in 2008, 61 in 2009, 68 in 2010, and an 83 in 2011, earning Ryder recognition in the Carbon Disclosure Leadership Index. Ryder’s 2011 score of 83 places the company in the “High” score category. The score is normalized to a 100 point scale and a High score suggests good internal data management and understanding of the issues that climate change presents to the company’s business. For more information about the Carbon Disclosure Project visit www.cdproject.net. To access the most recent copy of Ryder’s Carbon Disclosure Project questionnaire, visit www.ryder.com/greencenter. Ryder names its first full-time executive to lead the company's environmental program in 1986 SCOPE 1, 2, AND 3 EMISSIONS REDUCTIONS 4Scope 1 Direct Emissions For operations owned and controlled by Ryder, including on-site natural gas combustion and owned/operated vehicles. Year 2008 2009 2010 Emissions (Metric Tons) 565,488 470,481 461,828 4Scope 2 Indirect Emissions For purchased electricity at owned/ leased locations. Year 2008 2009 2010 Emissions (Metric Tons) 109,728 91,090 86,420 4Scope 3 Indirect Emissions Beginning in 2009, Ryder implemented initiatives to better track, report and reduce Scope 3 (indirect) emissions associated with employee business travel. Using improved communication technologies to encourage web-based meeting conferencing and digital online conferencing. Ryder reduced the amount of “short-flight miles” by more than 390 miles in 2010 over 2009. Short-flight miles (less than 280 miles) are more fuel intensive than longer-flight miles. To further reduce Scope 3 indirect emissions associated with employee air miles traveled, working with our travel partner we have established new travel guidelines and policies to better manage business travel.This includes the development of enhanced travel management dashboard tools that provide visibility for all employee travel.We also utilize a Green Travel Benchmark that computes and quantifies overall company Scope 3 emissions Ryder reduced energy and water consumption in U.S. and Canada operations 18 associated with business travel in accordance with GHG Protocol. In 2010, Ryder Scope 3 emissions associated with employee business travel was 13,510 metric tons. Greener Information Technology (IT) Solutions As information technology systems and services continue to move away from paperbased management to more automated, digital management resources, the demand for electricity to support these systems also increases. By developing more sustainable alternatives for managing IT infrastructure, Ryder has decreased costs, energy use, and greenhouse gas emissions. Optimizing processes and using existing servers and storage resources has resulted in enhanced utilization of our IT assets and a reduction in overall energy consumption. By employing server virtualization technologies at four major data centers in the U.S., we have reduced the number of general shared-use servers from 300 to 20. An additional 100 dedicated-use servers are targeted for consolidation. Our Green IT Goals include: G R E E N S U P P LY C H A I N S Carbon Footprint Measurement An increased emphasis on carbon management brings an increased demand for emissions disclosure and reporting. In addition to providing environmentally sound transportation and supply chain solutions, our customers are looking to us to provide specific data related to carbon emissions associated with their transportation activities. To assist current and prospective customers looking to measure, analyze, and report their transportation emissions, we have developed a standard Carbon Footprint Metric.This reporting tool is used in conjunction with our fleet and logistics services, fuel efficient equipment, energy tracking and conservation programs, and other environmentally sound customer solutions. The Carbon Footprint Metric provides a platform for providing customers with a basic tool to compute CO2 emissions associated with vehicle transportation. The metric has been developed in conjunction with and to supplement standard transportation management data reported to customers. We have elected to report our Carbon Footprint 4 Reduce data power consumption. 4 Optimize data center capacity and use. 4 Eliminate unused, underused, and redundant servers, where possible. 4 Consolidate physical servers using virtualization technologies. 4 Consolidate applications and software programs from multiple servers to one shared resource. 4 Develop environmental procurement specifications for the purchase of future IT equipment. 4 Evaluate power management tools to control end-user power. Ryder was recognized by the 2011 CDP in its Carbon Disclosure Leadership Index Click Here to Learn More 4 19 Metric calculation on a ton-mile basis because any increase or decrease in tons per mile or miles per load correlates to changes in the customer’s carbon footprint. Education and Awareness We also understand that efficient execution in a logistics and transportation network is good for business and for the environment. As a leading transportation and logistics provider, we play a meaningful role in raising awareness in the marketplace about the important impact global supply chains have on sustainable business. To further support our customers and the business community in understanding the green benefits of managing an efficient supply chain network, we have sponsored Florida International University’s Annual Green Supply Chain Forum in Miami annually since 2008. The Forum invites experts in industry and government to help businesses determine ways to quantify their environmental efforts. In 2010, the Forum focused on four core areas: 4 4 4 4 Technology and the green supply chain; Understanding the future of regulations; Market demands; and Framework for ranking performance. People & Community The work we do often puts us in potentially dangerous situations and requires us to be constantly vigilant and responsible regarding safety. Our demonstrated commitment to safety has earned us a reputation as an industry leader. Because safety is an underlying value and goal of the company, our focus is sustained by multiple safety programs and initiatives.We are committed to rewarding and recognizing those individuals and teams who meet their safety goals because delivering world-class safety performance is critical to the company’s long-term success. Conducted over 130,000 online driver training sessions Industry leader in safety performance as proven through benchmark studies and Comprehensive Safety Analysis (CSA) Scoring Click Here to Learn More 4 20 SAFETY MANAGEMENT SYSTEM Ryder’s Safety Management System includes formalized procedures and standards that provide the framework allowing our employees to work safely every day. Safety performance is measured utilizing leading indicators as well as injury and collision frequency and severity. Proactive measures include frequent behavior observations and training, as well as other incident prevention activities. We measure each location’s compliance with these established procedures through electronic reporting and ongoing audit programs. Operational Safety Plans are developed each year that focus on causation to target prevention activities throughout the organ- at all levels of management and with each employee.The accountability system includes establishing objectives, communicating these objectives and expectations, monitoring performance through monthly reporting and scorecard teleconference calls, and recognizing good performance. Safety Steering Committees establish the management, accountability, and communications process at the local level to successfully implement our safety program. Safety Training and Performance The Ryder safety organization develops safety communications and training programs, conducts research on new safety-related technology and manages the implementation of these technologies, provides our operations with standardized safety dashboards and trend data, and performs audits, major investigations, and supports new business start-ups. For customers, our safety team provides value-added safety services through www.rydersafetyservices.com where customers can access safety and compliance training, products, and services. In 2009 and 2010, we made progress in several areas including: Ryder is committed to protecting its employees, customers, and the general public. Safety, health, and security are key business objectives and values that must not be compromised. ization. The Operational Safety Plan is distributed throughout our company utilizing a proactive web-based software system, Safety Tracking and Reporting (STAR). In addition to defining the preventive safety agenda for each month, the STAR system also provides a tracking mechanism that monitors completion of the Operational Safety Plan on a monthly basis. We have a strong system of accountability 4 Continued the use of innovative vehicle safety technologies such as GreenRoad, Smart Drive, Iteris, Eaton Vorad, and CruiseKing. 4 Launched an upgraded version of Ryder’s incident management system designed to provide quick visibility to claims at all management levels and promote an immediate corrective action response from field operations. In 2009 and 2010, approximately 192,000 online safety training lessons were completed. Over 350,000 lessons have been completed since the inception of this training program in 2005. 4 Implemented a cell phone prohibition for company drivers while driving. 4 Developed and implemented a Sleep Apnea Wellness Program to reduce the effects of driver fatigue among drivers with this condition. 4 Established a communications, tracking, and reporting system to ensure satisfactory performance to the Federal Motor Carrier Safety Administration’s Compliance, Safety and Accountability program. 4 Fulfilled requirements to become a member of ISNetworld, a global resource that connects corporations with safe, reliable service partners. 4 Improved maintenance safety processes linking safety procedures with maintenance tasks. 4 Strengthened safety audit processes. 4 Provided technical safety direction for the maintenance of compressed natural gas and liquid natural gas vehicles. Ranked as a top U.S. company for security practices in the Transportation, Logistics, Supply Chain, and Warehousing industry sector in 2009 and 2010 Security Benchmarking Survey, by Security Magazine Implemented several key safety initiatives in the UK including a Return to Work Program, Training and Management Scorecard and Accountability processes Click Here to Learn More 4 21 Drug and Alcohol Policy We recognize that drug and alcohol abuse impairs judgment, significantly increases the risk of injury, and poses a threat to safety. Our Drug and Alcohol Policy applies to all of our employees, including contract and supplier personnel who are expected to abide by the policy while on our premises or while performing any work for Ryder. The annual Ryder Driver of the Year program recognizes three drivers who exemplify Ryder’s commitment to working and driving safely while delivering outstanding customer service. Ryder has recognized driver safety excellence for 38 years. Safety Recognition Ryder’s safety awards and incentive programs are designed to encourage hands-on involvement, teach the right behaviors, and reinforce our safety culture. The annual Chairman’s Safety Awards program, now in its 12th year, recognizes employees across all business segments who achieve the highest overall rankings based on safety metrics such as lost work days, and injury and collision frequency. We reward our technicians and other service employees through the Ryder Performance Challenge (RPC) program. The program rewards employees who meet quantitative targets focused on safety, customer satisfaction, productivity, and quality execution. We annually recognize employees throughout the organization for their commitment to Ryder's safety efforts, quality service to our customers, and individual contributions that make us successful. We also recognize individual employees who worked during the previous year without a preventable collision or injury. Transportation of Hazardous Goods Although transportation of hazardous goods is not a service that Ryder has targeted for growth or development, our policy on the transportation of hazardous goods applies to any instance in which a Ryder employee, including lease employees and owner-operators, is directly involved in such transportation, including loading and unloading, packaging, labeling, and vehicle operation. These employees are required to receive HazMat Security Awareness training. Hosted U.S./Mexico and Northern Border Security Conferences with support of the Department of Homeland Security to improve collaboration and share best practices among government agencies and business partners 22 Hours of Service We have strict policies and procedures relating to Hours of Service regulatory requirements for all of our drivers. We do not permit any driver employed by, or leased to, Ryder to violate these regulations. Violations can result in disciplinary action up to and including termination. All of our drivers and location managers are required to know, understand, and comply with these regulatory requirements, including logging and reporting of Hours of Service. On a monthly basis, our Compliance team selects locations to be audited and Hours of Service records are submitted by these locations to our log audit vendor. The results of these audits, and any records that contain violations, are returned to the location manager for review and corrective action. Fatigue Management We recognize the adverse effects of fatigue on the safety and health of our employees and those with whom our employees interact. It is the responsibility of both Ryder employees and management to work together to minimize these effects. Ryder’s Fatigue Management Program is in place to ensure that no Ryder driver shall operate a vehicle on company business while the driver’s ability or alertness is so impaired by fatigue as to make it unsafe to operate a motor vehicle.This program consists of training, risk evaluation of work schedules, resources and proposed routes, communication processes, and safety reviews. Completed C-TPAT border security certification for Ryder Supply Chain Solutions Asia Click Here to Learn More 4 Safety Performance Results FMS Safety Performance Results U.S. OSHA Recordable Injury Frequency Rate* 2010 2009 Fleet Management 1.78 1.86 Solutions Canada Total Injury Frequency 2010 Fleet Management 1.44 Solutions United Kingdom Injury Frequency Improvement from 2009 to 2010 Lost Workday Rate Improvement from 2009 to 2010 2009 2.54 46% 13% SCS Safety Performance Results U.S. OSHA Recordable Injury Frequency Rate* 2010 4.91 2009 4.12 4.89 5.98 4.90 4.77 Canada Total Injury Frequency 2010 Canada Logistics 6.60 2009 5.50 Supply Chain Solutions Dedicated Contract Carriage U.S. Logistics SECURITY Through improving relationships and collaboration with international government security agencies and critical business partners, Ryder has become a recognized industry leader in transportation and supply chain security. We are committed not only to bringing higher levels of security to our operations and the customers we serve, but also to sharing best practices with industry partners and government regulators to improve overall security in the transportation and logistics industry. Our security goals are to: 4 Create an environment where employees are secure in their workplace; 4 Provide the most innovative security best practices to secure our customers’ supply chains; 4 Design security programs that seek to ensure that our public engagements remain safe and secure; 4 Ensure that our customers are confident that their inventory and business information is well guarded; 4 Continue proactive involvement with key policy makers and policy making bodies impacting the truck leasing, truck rental, logistics, and transportation sectors; and 4 Ensure that all levels of management have increased awareness of security issues, threats, and protection strategies. Collisions per Million Miles** – U.S. and Canada Supply Chain Solutions Dedicated Contract Carriage U.S. Logistics Canada Logistics 2010 2.31 2009 2.09 2.70 3.18 2.77 3.10 2.57 2.70 * OSHA Recordable Injury Rates for the U.S. Transportation and Warehouse Industry Segment can be found on the Bureau of Labor Statistics website at http://bls.gov/iag/tgs/iag48-49.htm#fatalities_injuries_and_illnesses. **Collision Frequency data for U.S. carriers can be compared on the Federal Motor Carrier Safety Administration website at http://ai.fmcsa.dot.gov/sms/. Customs and Border Security Our Corporate Security group is responsible for the oversight of customs compliance and operational functions related to the movement of freight through the global supply chain. Ryder is certified as a Third Party Logistics Provider (3PL) in the Customs-Trade Partnership Against Terrorism (C-TPAT) for logistics operations in the U.S., Canada, Mexico, and Asia. In April 2010, we hosted a U.S.-Mexico Border Security Conference to initiate Launched a Sleep Apnea Wellness program to reduce the effects of fatigue among Ryder drivers with this condition 23 information sharing between customers, business partners, and government security agencies and to reinforce our commitment to proactively improving levels of safety and security. The conference took place at our state-of-the-art Transportation Management Center in Ft. Worth, Texas, and featured presentations by the U.S. Department of Homeland Security and its component agency, U.S. Customs and Border Protection, International SOS, and LoJack Supply Chain Integrity. In November 2010, Ryder hosted a North American Border Security Conference, primarily to address security threats and customs compliance on the U.S./Canada border. The conference, which took place at our Operations Management Center in Novi, Michigan, featured presentations by the U.S. Department of Homeland Security and its component agency, U.S. Customs and Border Protection, the U.S. Chamber of Commerce, Canada Border Services Agency, the Royal Canadian Mounted Police, and state homeland security advisors from Idaho, Michigan, and Wisconsin. Rental Fleet Security We have strong programs in place to improve security around the company’s rental fleet. Ryder’s rental business primarily serves commercial rental customers that need to supplement their private fleet of vehicles on a short-term basis either because of seasonal increases in their business or Ryder’s Driver of the Year award has recognized safety and service excellence for 38 years. Click Here to Learn More 4 projects that require additional transportation resources. Our commercial rental fleet also provides Ryder’s contractual full service lease customers with additional vehicles to handle peak or seasonal needs. All of our rental operations are companyowned and operated, and staffed by Ryder employees. This helps to ensure proper control of our rental operations, since we control the policies, procedures, training, and IT systems. Our rental vehicle security programs include appropriate customer assist TRALA in the development of training materials and establishment of industry standards regarding the improvement of truck and car rental security. In addition, we have regular meetings with Department of Homeland Security staff to share information and discuss methods of improving truck rental security. We take actions to comply with various “know your customer” regulations (such as the U.S. Patriot Act) to enable us to form a reasonable belief that we know the identity Ryder’s security program is also designed to help prevent vehicle theft through key control, facility security, yard checks, GPS tracking, security inspections and audits, communication and awareness, and training of rental personnel to recognize and report suspicious activity. identification and screening processes against various government watch lists and other approved lists of individuals and organizations with which U.S. citizens and residents are prohibited from doing business. Our fleet security policies not only apply to rental vehicles, but are also part of any new lease, used vehicle sales, and supply chain contract process prior to releasing assets and vehicles into the custody and control of customers and their agents. Ryder’s security program is also designed to help prevent vehicle theft through key control, facility security, yard checks, GPS tracking, security inspections and audits, communication and awareness, and training of rental personnel to recognize and report suspicious activity. We regularly meet with industry partners, organizations, and government regulators to improve overall security in the truck rental and leasing industry. For example, we are a member of TRALA (Truck Rental and Leasing Association) and we of each customer. We have implemented specific policies and procedures that are activated based on alerts from the U.S. Department of Homeland Security through the National Terrorism Advisory System.We also implement specific temporary security measures for special events that require a heightened level of security. In the event of a security incident, it is our policy and practice to cooperate fully with all law enforcement agencies. We have maintained a long-standing commitment to this policy and will continue to do so in the future. Our partnership with government law enforcement agencies helps to improve the flow of information to advance and enhance the security infrastructure. Crisis Management We take a tiered approach to Crisis Management Planning. At the local level, each Ryder site has documented Emergency Response Plans including plans for severe weather, fires, evacuations, chemical spills, and other similar events. Sites that are critical for Ryder and our customers’ continued operations have documented Business Continuity and Disaster Recovery plans to minimize the impact of crisis events. At the corporate level, we have a long standing and robust Crisis Management Plan to ensure that the appropriate executive, financial, and technical resources are applied in response to crisis events which could impact our employees, customers, assets or the corporation as a whole. Our Crisis Management Plan was developed on the following principals: 4 Protect Ryder's human capital as our highest priority; 4 Minimize the impact of crisis events through preparation and prevention, when possible; 4 Ensure that appropriate individuals are notified of unanticipated crisis events as quickly as possible so that intervention efforts can be applied at the earliest stages; 4 Identify the steps that need to be taken during a crisis event in advance through effective planning, practice, and review; and 4 Engage with the public sector and our customers to ensure proper awareness, communication, and planning. Ryder was the first transportation industry recipient of the National Safety Council's highest honor, the Green Cross for Safety medal Conducted over 192,000 online safety training lessons 24 Ryder employees are the driving force behind our company’s success.With diverse experiences and backgrounds, a passion for continuous improvement and customer service, and a commitment to helping others in need, our people are the finest at what they do when it comes to delivering the best solutions and making meaningful contributions in their communities. Launched a Diversity & Inclusion Council, Mentoring Program, and Diversity Scorecard linking executive pay to diversity goals Selected the American Red Cross as Ryder’s national charitable partner, with a $1 million multi-year commitment, making Ryder a member of the Annual Disaster Giving Program Click Here to Learn More 4 Click Here to Learn More 4 25 COMMUNITY Ryder Charitable Foundation We make contributions to non-profit organizations primarily through the Ryder Charitable Foundation. Funded entirely by Ryder System, Inc., the Foundation emphasizes support for those communities where significant numbers of employees live and work.The Foundation offers support through cash grants and coordinating volunteerism of employees.The focus areas of Foundation giving are health and human needs, education, and cultural arts. More information about the Foundation can be found in the About Us section of Ryder’s corporate website under Corporate Giving. Foundation Giving Per Focus Area 2010 Cultural Arts Human Needs Education In 2009, Ryder established local Public Affairs Councils at its major employee facilities in Atlanta, Ga., Novi, Mich., and Dallas/Ft. Worth, Texas. The mission of these Councils is to identify ways for local employees to give back to their communities and make recommendations for charitable funding from the Ryder Charitable Foundation that is meaningful and relevant to the employees that the Councils represent. The Foundation supports Ryder’s overall company focus on creating a diverse 2009 2010 Ryder Charitable Foundation Giving and inclusive working environment for employees. As part of this effort, the Foundation has funded numerous organizations such as the National Gay & Lesbian Task Force, Women Executive Leadership, United Negro College Fund, and The Hispanic Scholarship Fund. The Ryder Foundation has supported many colleges and universities within the United States for many years through our Employee Matching Gifts to Education program, as well as through direct donations to universities/colleges. The Foundation also has a longstanding history of funding community organizations near our South Florida corporate Headquarters, including major funding to Camillus House (an organization that provides humanitarian services to the poor and homeless), Miami Science Museum, St. Thomas University, Salvation Army, and the Zoological Society of Florida. National Charitable Partner As a transportation and logistics provider, we understand the complexity and depth of timely resources needed to respond to disasters. In June 2009, Ryder announced it was committing $1 million over three years to the American Red Cross through the Ryder Charitable Foundation to support national and local disaster preparedness and Redesigned leadership competency model to be the basis for decision making related to hiring, assessing, developing, and promoting people response efforts, making it a proud member of the American Red Cross Annual Disaster Giving Program. Whether through financial support, vehicle donations, or volunteer time from our employees, our goal is to do all we can to help increase the efficiency, capacity, and cost effectiveness of American Red Cross operations so the organization can continue to prepare and respond quickly and effectively in times of disaster. Of this gift, $850,000 was designated to the national American Red Cross Disaster Relief Fund, and the remaining $150,000 was directed to the local Greater Miami & the Keys chapter. In times of disaster, in addition to providing financial support to national headquarters and the Greater Miami & the Keys chapter, we provide in-kind donations of trucks, sponsor local Red Cross events, and support local disaster relief efforts. We have also extended preferred pricing for rental vehicles to all Red Cross chapters in the U.S., and we have given the Red Cross access to discounted used vehicles through Ryder’s Used Vehicle Sales division. In addition, we leveraged our expertise in logistics to help the Red Cross improve its operational response capabilities by providing Red Cross employees with free Six Sigma Disaster Logistics Training conducted by Ryder supply chain engineers. Employee Volunteerism and Giving Outside of formal company-sponsored programs, Ryder employees all over the world are moved to volunteer their own time and generously donate money out of their own pockets to make a difference. This grassroots effort, “Ryder Cares,” includes everything from donations for our troops overseas, toy and clothing drives, participation in charity walks and runs, and fundraisers for local food banks. Began multi-phased transformation of Ryder’s health and welfare benefits strategy to focus on consumerism, accountability, wellness, and prevention 26 Ryder is also tapping into our base of more than 20,000 U.S. employees as part of a grassroots volunteer effort to support disaster preparedness and response activities in communities in which we operate. In the fall of 2009, we held volunteer kick-off sessions at Ryder’s Headquarters, as well as in some of the company’s large employee facilities in Alpharetta, Ga., Dallas, Texas, and Novi, Mich. In 2010, we launched a national employee volunteer program through VolunteerMatch, a web-based volunteer system that makes it as easy as possible for any employee to identify and register for local Red Cross volunteer opportunities that match their interests and schedule, as well as track volunteer activities and hours. Ryder has also supported the United Way of Miami-Dade for nearly four decades. During annual fundraising campaigns held at our Headquarters in Miami, employees are inspired to raise thousands of dollars, matched by a contribution from the Ryder Charitable Foundation. In 2010, we surpassed our United Way Campaign goal, raising over $215,000 in employee pledges that were added to a $250,000 contribution from the Ryder Charitable Foundation for a total Ryder contribution of over $465,000 to benefit the United Way of Miami-Dade.The pledged employee amount was a 5% increase from the 2009 campaign and our largest employee contribution to date. Ryder employees serve as board members of many not-for-profit organizations promoting economic development, education, performing arts, animal welfare, education, and social service agendas. Current board affiliations include but are not limited to: American Red Cross; Barry University; Big Brothers, Big Sisters of Greater Miami; Boy Scouts of America/South Florida Council; Easter Seals; Greater Miami Chamber of Commerce; Healthy Mothers, Healthy Babies Coalition of Broward; Humane Society of Greater Miami; Junior Achievement of Greater Miami; Mercy Hospital Foundation; Miami Science Museum; Nat Moore Foundation; Sarcoma Foundation; St.Thomas University; United Way of Miami-Dade; Zoological Society of Florida. PEOPLE Ryder’s reputation as an industry leader has been earned over the course of close to 80 years in business. While our solutions and innovations are certainly worthy of recognition, the true source of Ryder leadership comes from our people. Ryder received the Corporation of the Year Award in the Transportation Industry from Michigan Minority Business Development Council in 2009 Employee Representation Approximately 2,900 of our employees in the U.S. are represented by labor unions. These employees are principally represented by the International Brotherhood of Teamsters, The International Association of Machinists and Aerospace Workers, and the United Auto Workers. Wages and benefits for these represented employees are governed by 99 labor agreements that are negotiated periodically. Talent Management & Recruiting We are a service business that relies heavily on our talented people, and at Ryder, managing that talent is a key business strategy. Business decisions around managing the supply and demand of our diverse talent are made purposefully in order to achieve superior business performance and enable our people to meet their full potential, now, and in the future. The largest proportion of Ryder’s workforce is made up of non-management employees, including shop maintenance technicians and service island personnel, professional drivers, and warehouse workers. The bulk of these workers are in the United States. As the overall United States workforce population ages, the transportation industry is faced with a shortage of qualified drivers Ryder received the Supplier of the Year for Diversity Efforts from Toyota in Georgetown, Ky. in 2009 and 2010 Click Here to Learn More 4 27 and technicians. In response to this, Ryder’s workforce planning strategy is heavily focused on developing a pipeline of diverse, talented people with the right aptitude and skills, who meet the company’s high standards for customer service, safety, and compliance. To build this pipeline, we have been implementing new and innovative approaches to recruiting by partnering with technical and vocational schools, leveraging our employer brand, and tapping into social networks. Ryder will continue to source and attract talent as a competitive advantage. One of our strategic recruiting initiatives includes hiring from the military because we understand the unique work experiences and value the leadership qualities inherent in military personnel. Specifically, the distinct logistical, mechanical, and management skills learned through military service are a great asset to Ryder’s organization. While we have been a long time supporter of hiring veterans, in 2011, we launched a number of new initiatives and partnerships to increase our focus on recruiting veterans for roles important to Ryder’s operations including diesel mechanics, professional truck drivers, logistics managers, and other professional support positions. Our focus on organizational development and learning goes well beyond building the functional and technical skills needed for our employees to do their jobs. Our culture is embedded with expectations around our leadership qualities. We communicate these qualities to our current and potential employees via the Ryder Leadership Competency Model. This model continues to define our expected leadership behaviors in four key categories: character, judgment, relationships, and results. When our leaders are most effective, they excel in these four equally important dimensions. Beginning in 2010, Ryder began hiring, assessing, developing, and promoting people using these competencies as our framework for decision making. Leadership behavior is now integrated into our performance management process and employees have access to a new interactive on-line training tool to help improve competency development. We also Health & Wellness Our approach to health and wellness is simple: help people stay healthy, help those with chronic conditions better manage their care, and identify, as best as possible, those who are heading toward a health care episode before it happens.We must do this while at the same time maintaining a benefits cost structure that is affordable for our employees and the company. We believe in the importance of continuing to provide employees with access to quality health care services and financial protection programs. Our health care strategy is centered on curtailing the rise of health care expenses for both employees and the company. This is accomplished through the promotion of consumerism, prevention, wellness, and quality of care. The transformation of our health and wellness program began in 2010, in advance of the Health Care and Education Affordability We believe in the importance of continuing to provide employees with access to quality health care services and financial protection programs. Our health care strategy is centered on curtailing the rise of health care expenses for both employees and the company. continue to further build our leaders’ expertise in all aspects of these categories through the delivery of an enterprise wide Management Development Program for supervisors and managers, as well as a Leadership Program for high potential managers. Going forward, we will continue to implement innovative training and development programs for functional, technical, and leadership skills in accordance with the strategic needs of the business. Recognized in the Human Rights Campaign’s 2011 Corporate Equality Index with a score of 93 out of 100 points for Lesbian, Gay, Bisexual and Transgender Equality Reconciliation Act being signed into law. This transformation included the introduction of proactive new approaches to help Ryder and our employees use health care dollars as effectively as possible, as well as a greater emphasis on wellness and preventive services. Beginning in 2010, all covered employees and family members enrolled in a PPO Plan are covered at 100%, for in-network preventive medical services and colonoscopies, with no deductible. All Ryder defines leadership in four key categories: character, judgement, relationships, and results Click Here to Learn More 4 28 U.S. employees who enrolled in any Ryder medical plan were automatically enrolled in a new Health Advocate program, fully funded by Ryder. This program provides employees with a dedicated Personal Health Advocate, typically a registered nurse, who will work with them one-on-one to resolve a range of clinical and insurance-related issues that typically overburden employees and their families. In recognition of the increased importance of Healthcare Flexible Spending Accounts, we have increased the amount of pre-tax dollars employees can save in their accounts from $3,000 to $4,000. Diversity & Inclusion At Ryder, diversity and inclusion is a strategic business imperative. We recognize that a diverse and inclusive culture enables our company to better serve our customers, creates a more productive and engaging workplace for our employees, and ultimately accelerates business growth and success. Our commitment to diversity and inclusion is represented by our core values of integrity, service, and performance as well as leadership competencies of character, judgment, relationships, and results. Our efforts in this area are led by the Department of Diversity and Inclusion which works directly with our Chairman and the leadership team to establish the strategic direction. A video by our Chairman about our commitment to diversity and inclusion is available on the Company’s website at www.Ryder.com. Ryder’s Diversity and Inclusion Council is led by our Chairman and CEO.The Council consists of eleven cross-functional Ryder’s vision for diversity and inclusion is to create a supportive, collaborative work environment that values individual differences and similarities, promotes respect for all individuals and their ideas, and enables everyone to contribute their full potential while achieving our business objectives. leaders, who represent a variety of diversity dimensions that reflect the many perspectives of our workforce.The Council is responsible for helping guide our initiatives and programs in support of our diversity and inclusion vision and mission. Supplier Diversity To be successful, we recognize that Supplier Diversity should be guided by adhering to a practice of inclusion rather than exclusion of diverse suppliers. Working with and forming partnerships with minorityand women-owned businesses is core to this mission. The mission of Ryder's Small Business and Supplier Diversity Program is to actively pursue and develop partnerships with qualified small and diverse businesses that enhance Ryder's overall commitment to delivering exceptional customer service, driving economic growth, and building global market share.We depend on the contributions of diverse suppliers to develop a strong foundation of customer loyalty and entrepreneurship to succeed in today's competitive marketplace. We believe that excellence in supplier diversity contributes to excellence in supply chain and transportation management. Ryder invests significant time and effort in identifying small businesses to provide various products and services to support our operations. As a result we have developed an extensive database of suppliers across the U.S. that meets our needs. This database is continuously being updated to reflect changes in our business requirements. We utilize multiple sources to support our efforts to engage small business participation. We also utilize databases maintained at numerous regional chapters of minority, small business, and veterans organizations. Ryder has a web portal that allows suppliers to become familiar with our Small Business and Supplier Diversity Program as well as an opportunity for prospective suppliers to register online at http://www.ryder.com/suppliers_home.shtml. The online registration form allows procurement professionals to query supplier profiles based on specific information provided by the supplier. In 2010, Ryder sourced $179 million or 4.6% of our total negotiable spend with small business/diverse suppliers. This represents an increase from 2009, where Ryder sourced $117 million or 3.96% of our total negotiable spend with small business/diverse suppliers. Ryder strives to ensure that veteran-owned, hubzone, disadvantaged, and women-owned small business concerns have an equitable opportunity to compete for subcontracts. In 2011, Ryder joined forces with the U.S. Chamber of Commerce to hire more veterans by joining the Veterans Employment Advisory Council Click Here to Learn More 4 In 1969, Ryder hired its first female professional driver 29 Maintaining high ethical standards, good corporate governance practices, and full compliance with the laws that govern our business are essential to preserving world-class business standards and investor confidence. Online compliance training implemented with 6,046 individual users in 2009 and 6,368 individual users in 2010 around the world In 2011, Ryder received an A-rating for its overall investor program from Investor Relations Magazine 30 Our Board of Directors is composed of eleven Directors, ten of whom are “independent” as defined under the New York Stock Exchange’s (NYSE) listing standards. In addition, our Board has adopted categorical director independence standards which are part of our Corporate Governance Guidelines. Pursuant to these Guidelines, the Board undertakes an annual review of director independence. Our independent directors meet regularly in executive session without management present as part of each regularly scheduled Board meeting. Our Board of Directors is held accountable to the same Principles of Business Conduct which are applicable to all Ryder employees. Our Chief Executive Officer serves as Chair of the Board.Through this rule, we believe that our CEO is in the best position to identify emerging issues facing the company, communicate company performance to the Board, and set the Board agendas.The Board has also recently created the role of a strong lead independent director to enhance the Board’s independent oversight of the company and uphold effective governance standards. Our Board has four standing committees: Audit, Compensation, Corporate Gover- nance and Nominating, and Finance. Each Committee is comprised solely of independent directors. We have adopted charters for each Committee that comply with the NYSE’s corporate governance listing standards, applicable provisions of the Sarbanes-Oxley Act of 2002, and SEC rules. Each charter sets forth the specific responsibilities of each Committee and provides for a periodic review of such charter and the applicable Committee’s performance. The specific Charters are available for review on the Corporate Governance page of our website. Each Committee has the authority to retain independent advisors and consultants. On an annual basis, our independent directors (on recommendation from our Compensation Committee) approve the compensation package for our CEO. The Compensation Committee reviews and approves the compensation packages for each of our other executive officers. Our compensation policies and decisions are focused on pay-for-performance principles and are strongly aligned with the short- and long-term interests of our shareholders. In 2011, our shareholders approved by approximately 94% the compensation of our named executive officers as part of the Company's first "Say-on-Pay" vote. Our Board determined that such votes will be held on an annual basis going forward. Shareholders and other interested parties wishing to communicate with our independent directors as a group can do so through an external toll-free hotline number, through the Corporate Governance page of our website, or by mail. In addition, anyone with concerns about the company’s accounting, internal controls, or auditing matters can communicate directly to members of our Audit Committee. All of these communications procedures can be accessed on our website. Our executive leadership team is comprised of the company’s CEO, Chief Financial Officer, Chief Legal Officer, Chief Ryder rated highly in several categories for Small-to-Mid Cap companies in Investor Relations Magazine’s annual survey of buy- and sell-side analysts Ryder recognized in 2010 as one of the Top 20 Companies for Best Corporate Governance. Administrative Officer, and the presidents of our Fleet Management Solutions and Supply Chain Solutions operating units.The executive leadership team supports the Board of Directors in executing the company’s strategy and overseeing the company’s operations. The only member of the executive leadership team who serves on the Board is our CEO. Risk Management We understand that risk is present in our everyday business and that risk-taking is a necessary part of growing and operating a business. Therefore, we have implemented an enterprise risk management (ERM) program to provide management and our Board with a robust and holistic top-down view of key risks facing the company. The Board is responsible for oversight of our ERM process and the CEO and executive leadership team are responsible for risk identification, management, and communication under our ERM processes. All significant risks identified by our ERM program are communicated to, and discussed with, the Board and/or one of the relevant Committees on a regular basis. STAKEHOLDER ENGAGEMENT As an international corporate citizen, Ryder interacts with a variety of stakeholders that affect, and are affected by, our services In 2009, 2010, and 2011, Ryder was named as having the Best Investor Relations Officer in the Air Freight and Surface Transportation Industries by Institutional Investor Magazine 31 and operations. Active engagement and dialogue with our stakeholders is a vital part of our business strategy and an essential aspect of corporate governance at Ryder. The manner in which we engage with our stakeholders varies according to the nature of our relationship with them. Employees We communicate clearly and frequently with our employees globally to engage them and make them aware of developments within the company and the industry. We value the feedback and input of our employees as an important contribution to our commitment to engagement and innovation. 4 We regularly communicate with our employees through an integrated program that includes print, online, audio CDs and broadcast media, as well as face-to-face interaction with Ryder’s leadership through localized visits and town hall-style meetings. 4 Recognizing that technology has fundamentally changed how we operate YouTube channel in 2010. 4 Employees are encouraged to ask questions, and share feedback and suggestions about policies and initiatives through a number of interactive feedback programs. 4 We provide anonymous toll-free hotlines and e-mail systems for employees to make confidential reports, or to seek guidance about legal, ethical, or compliance issues. Investors We are committed to providing our shareholders and the investment community with access to information that is timely, material, accurate, and complete, and which fairly and accurately presents our financial condition and results of our operations, in a manner consistent with all applicable legal and regulatory requirements. Our investor relations program includes: 4 Ongoing dialogue with participants in the equity markets, including stock Customers Ryder strives to continually deliver on our promises to customers. To improve customer engagement and service, we utilize a number of mechanisms to obtain feedback from customers about our products and service performance, including: 4 A defined customer satisfaction measurement process; 4 Proactive, regular customer satisfaction and retention surveys which are tracked in a secure, web-based system that allows for trend analysis and other management reporting. A closed- loop process Ryder warehouse employees attend a town hall meeting. Ryder strives to continually deliver on our promises to customers. To improve customer engagement and service, we utilize a number of mechanisms to obtain feedback from customers about our products and service performance. by offering new ways to engage with customers, colleagues, and the world at large, in 2010 we introduced our first social media policy.The policy encourages employees to engage in business-related social networks as a means of fostering productivity, enhancing creativity, building stronger, more successful business relationships, and ultimately contributing to our success. Ryder launched a Facebook page, Twitter feed, and 2009 ensures action plans are implemented where necessary to continually improve performance; 4 Formal and informal research to identify industry trends impacting current and future product and service offerings; and 4 Regular and ongoing customer-directed communications and training programs including webinars, newsletters, and face-to-face customer forums. In 2007, 2008, and 2009, Ryder ranked in the top ten for Best Overall Investor Relations Program by Investor Relations Magazine research analysts, as well as current and potential shareholders. 4 Participation in numerous equity investment conferences during the year to communicate our strategy and operating results. Presentations at these events are web cast and accessible at http://investors.ryder.com. 4 Visits to investors in their offices throughout the year, hosting investors at the company's headquarters in Miami to interact with the management team, and hosting tours of operating facilities to enhance our investors' understanding of our business. 4 Quarterly conference calls that are fully accessible to the public to discuss recent Recognized by GovernanceMetrics International in 2010 as one of The 20 Most Responsible Companies Click Here to Learn More 4 32 operating results and future business trends. Information regarding quarterly conference calls is published via a press release and is also available on our website. 4 A dedicated Investor Relations section of our website, accessible at http://investors.ryder.com. 4 An annual review and reports on Ryder’s financial performance available online at http://investors.ryder.com. Suppliers Our global suppliers are key to our operations, and we are committed to long-term, mutually beneficial relationships with them. Ryder works with suppliers who deliver the best quality, service, and highest value-to-cost ratio. Our suppliers are innovative and dedicated to promoting continuous improvement in their operations, and are also committed to compliance and high ethical standards. 4 Suppliers interested in working with Ryder can visit the supplier registration section of our website in order to have the opportunity to bid on upcoming Ryder business. 4 Ryder’s Supplier Code of Conduct is available on our website and covers compliance with employment laws, conflicts of interest, gifts, bribery and corruption, antitrust and fair dealing, environmental stewardship, and other related policies. 4 Our Small Business and Supplier Diversity Program actively pursues and develops partnerships with qualified small and diverse businesses. Government Affairs We continually monitor emerging government issues and activities, and develop and implement government relations strategies to achieve our business objectives. We view our participation in the political Ryder participates in a natural gas vehicle event on Capitol Hill in Washington, DC. process, including collaborating with governments, lobbying for solutions, and contributing funds to federal U.S. and select state candidates through the Ryder Employees Political Action Committee (Ryder PAC) as an important part of our responsibility to our stakeholders and in the best interests of our company. Our Government Relations activities include: 4 Developing and advocating positions on important public policy issues that are core to our business, specifically those that affect the way customers use or have access to our products or services. Areas of activity include tax policy, civil justice reform, energy and climate change, health care and employment, transportation policy, free trade, and transportation safety and security. 4 Membership and participation in a wide array of trade associations that address issues important to the company and our stakeholders at both the federal and state levels. Key associations include: In 2008, 2009, and 2011, Ryder was ranked in the Top 5 U.S. Companies for Best Disclosure Procedures by Investor Relations Global Rankings U.S. Chamber of Commerce, National Association of Manufacturers, Truck Rental and Leasing Association, American Trucking Associations, BIPAC, American Benefits Council, Florida Chamber of Commerce, and fifty individual state trucking associations. In 2010, we worked closely with the U.S. Congress to: 4 Pass legislation allowing for accelerated depreciation of new equipment purchases helping to stimulate the economy and create jobs. 4 Introduce legislation to provide incentives to convert medium- and heavy-duty trucks to natural gas fuels and build natural gas fueling stations – an important step toward reducing America’s dependence on foreign oil. 4 Promote legislation in support of tax reform and fair liability practices for business and the transportation industry. Ryder has only had four CEOs in its almost 80 year history 33 We believe that public policy is best made by those who know and understand our issues. As allowed under federal election finance law, we sponsor the Ryder Employees Political Action Committee, an employeemember political action committee that supports political candidates whose views are consistent with the company's goals. Ryder's PAC is governed by a Board of Directors whose members represent our diverse businesses and employees. The Board sets criteria for evaluation of candidates for state and federal office across the nation. The Board also advises the Government Relations staff in its decisions on whom to support for public office. The PAC supports incumbents, challengers, and candidates for open seats. The Ryder PAC makes contributions from funds gathered from eligible employees to federal and select state candidate campaign committees and political party organizations. The Ryder PAC disburses no corporate funds to political candidates or committees. Disbursements to qualified candidates and organizations are listed at www.fec.gov. The PAC’s Board has set specific criteria by which to choose candidates to receive contributions: 4 The candidate demonstrates a clear understanding of the impact of government policies on our ability to compete in the marketplace. 4 The candidate's voting record and/or pro-business philosophy supports our position on key legislative issues. 4 The candidate has a good chance to be elected, given sufficient financial support. 4 The candidate represents a district which includes Ryder employees or facilities, and/or serves on key legislative committees. are filed with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives, reporting total lobbying expenditures and contributions made to members of Congress, as well as sharing issues and disclosing our employees and contractors participating in our advocacy activities. These reports can be accessed at www.house.gov and www.senate.gov. In 2010, Ryder developed a policy addressing the governance of corporate political contributions to candidates, parties, and organizations as allowed under federal and state laws. Among other provisions, the policy adopts strict approval procedures for contributions and the reporting of those contributions to Ryder’s Board of Directors on an annual basis. The policy can be found in our Principles of Business Conduct. Our Government Relations activities are disclosed under the Lobby Disclosure Act (LDA). Semi-annual and quarterly reports In 2010, Ryder introduced its social media policy and launched on Facebook, Twitter, and YouTube Shareholders can communicate with Ryder's independent Directors by visiting the "Contact our Board" page on Ryder's website. Click Here to Learn More 4 34 It is essential to ensure that we conduct business fairly, honestly, and ethically at all levels of the organization. Our Principles of Business Conduct, which are the foundation of our model for ethical behavior, cover all areas of professional conduct including conflicts of interest, confidentiality, compliance, and mechanisms to report known or suspected wrongdoing. Created the role of a strong lead independent director to facilitate and strengthen Ryder’s Board of Directors’ independent oversight of the company and to uphold effective governance standards 35 Launched quarterly internal compliance publication,“Clear Signals,” featuring actual stories of employees who have demonstrated ethical behavior Our Global Compliance Team is committed to ensure that employees, customers, and vendors are aware of the legal and ethical obligations related to getting the right results the right way. This team develops training initiatives and policies related to the Sarbanes-Oxley Act, Foreign Corrupt Practices Act, insider trading, conflicts of interest, competitive intelligence, antitrust, export controls, data protection, ethics, anti-money laundering, government contracting, due diligence for acquisitions, document retention, employment, and corporate compliance in the U.S., Canada, Europe, Mexico, and Asia. In addition, the team is also responsible for updating our management, executive team, and Board of Directors on key compliance and ethics risks facing the company, overseeing anonymous reporting and complaint resolution proceedings, supervising sensitive investigations conducted by internal and external resources, and auditing compliance with various regulations and policies. Ryder’s compliance program is also reviewed by external resources. Our Corporate Compliance and Risk Steering committee consists of Vice President- and Director-level representatives from Human Resources, Tax, Audit, Safety/Security, Legal, Risk Management, Compliance, Operations, Information Technology, Environmental, Government Relations, and Corporate Accounting. This committee reviews and prioritizes compliance and risk issues and ensures that key stakeholders are informed of changes in the law or relevant policy that could impact our business. Online compliance training was rolled out to more than 6,000 individual users in 2009 and 6,300 individual users in 2010. In 2009 and 2010, face-to-face training and risk assessment interviews were conducted with key management personnel in China, Singapore, Hong Kong, Germany, UK, Mexico, and Canada on compliance and Sarbanes-Oxley issues. Ryder's commitment to ethical business is governed by our Principle’s of Business Conduct, which apply in every location in which we do business around the world, as well as to every employee, officer, director and member of the Board of Directors 36 In the U.S., monthly webinars are conducted by internal employment lawyers on legislation and policies for Human Resource managers. In addition, Litigation Avoidance Training is conducted monthly for operations staff in various cities throughout the U.S. This eight-hour course discusses state and federal employment laws, as well as ethics issues. Over the past eight years, several thousand managers have been trained. In 2009, two anonymous risk awareness surveys were completed by 79% of our employees who have access to e-mail, which covered awareness of policies and regulations governing the business as well as the effectiveness of compliance and ethics training. One survey was developed and scored by our external training vendor, and we were able to assess how we compare in our risk profile to other similarly situated companies. The other risk awareness survey was developed internally and focused on location specific risks. To stay up to date on Ryder’s sustainability initiatives, visit the Sustainability section of our online newsroom at http://newsroom.ryder.com. Ryder System, Inc. Corporate Sustainability Report
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