Caterpillar Inc., a manufacturer of construction and mining equipment, is examining a range of strategic options for its third party logistics (3PL) business, which is part of its wholly owned subsidiary, Caterpillar Logistics Services Inc. (Cat Logistics). The company believes the 3PL business is a unique and attractive asset that has excellent growth potential.
Options under consideration, according to Caterpillar group president Stu Levenick, include a potential sale of the 3PL 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,” says 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.”
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.
According to Dick Armstrong, chairman of Armstrong & Associates Inc., a research and consulting firm specializing in the 3PL market, Cat Logistics has $2.3 billion in revenue, 12,000 employees and 60+ contracts, largely in the automotive, industrial and high-tech sectors.
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 3PL business is expected by the end of 2011.