Menlo Worldwide Logistics, the global logistics subsidiary of Con-way, has opened a dedicated Midwest-area export logistics centre in Joliet, Illinois, which is supporting export activity for commercial vehicle and engine maker Caterpillar.
Menlo will provide export consolidation services including receiving, export packaging and loading/shipping over 18,500m2 of the 32,500m2 building, allowing for future expansion.
Exports are important for Caterpillar, which derives more than 70% of its revenue outside the US.
“As soon as we started talking with Caterpillar, it was apparent that there is strong cultural and business alignment between our companies,” said Robert L. Bianco Jr., President, Menlo Worldwide Logistics, in a statement. “We share a commitment to lean principles and our core values are very similar. We know we can provide the speed, cost and quality they want.”
But with no sign of recovery in the commercial construction industry why would Caterpillar exports be a target area for investment now? Caterpillar reported worldwide dealer sales of its machines down 47% during the three months ending 30 June.
Furthermore, Jim Owens, Chairman and CEO of Caterpillar, said in a recent statement: "Our 2009 sales have been hurt by weak end-user demand and significant reductions in dealer inventory."
Could that reduction in dealer inventory be one reason for increased logistics activity? With Caterpillar dealers expected to reduce their machine inventories by $3 billion this year, 2010 could see a period of profitable restocking that some analysts expect to create top line growth for the company. This prospect has led Caterpillar to raise its full-year forecast and report strong earnings despite reporting such a significant drop in dealer sales this year.
Meanwhile, Menlo Worldwide Logistics increased Q2 profits by 57.4% to $7.8m thanks to new customer contracts such as the one with Caterpillar.