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Caterpillar considering strategic options for third party logistics business

The company believes the third party logistics business is a unique and attractive asset that has excellent growth potential.
By Patrick Burnson, Executive Editor
March 23, 2011

Caterpillar Inc. today announced it is examining a range of strategic options for its third party logistics business, which is part of its wholly owned subsidiary, Caterpillar Logistics Services, Inc. (Cat Logistics). The company believes the third party logistics business is a unique and attractive asset that has excellent growth potential.

“Over the last 24 years, the company has leveraged its traditional competitive advantage in the Caterpillar parts distribution business to create a global leader in third party logistics, with dedicated employees, unique and attractive assets and excellent growth potential,” said Caterpillar group president Stu Levenick.

Options under consideration include a potential sale of the third party business or structuring it as an independent business within Cat Logistics.

“The third party logistics business has been a high performing operation within Caterpillar, serving more than 50 customers worldwide in a number of different
industries,” said Steve Larson, Vice President of Caterpillar Inc. and Chairman and President of Cat Logistics. “Given Caterpillar’s increased focus on the significant growth opportunities in its core businesses, the company has decided to consider its options for the future of this business. As we work through these alternatives, we will continue to be sharply focused on delivering value for our customers,” Larson added.

Caterpillar manufacturing logistics and transportation operations and Caterpillar brand parts distribution are not part of the third party business and are not part of this strategic review. Those operations will continue as core businesses within Cat Logistics.

“This is interesting, but very logical,” said Charles W. Clowids jr.?Managing Director?Transportation Advisory Services for IHS in Boston. In an interview, he told LM that CAT Logistics is indeed a strong player and can likely do well as a “stand alone” enterprise.

“The expertise they initially developed for use by Caterpillar in-house, has been successfully provided to other major firms. A proven global 3PL should be attractive both as an investment and/or an acquisition.”

Caterpillar has retained B of A Merrill Lynch and Robert W. Baird & Co. to assist the company as it reviews alternatives. A final decision about the third party logistics business is expected by the end of 2011.

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About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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