Caterpillar Signs Parts Re-Manufacturing Deal in China, Opens Plant

Equipment giant Caterpillar recently announced a deal with the Chinese government to develop a “re-manufacturing” industry in the country to remake and recycle parts for its earth movers and other equipment.

In October, Caterpillar opened a plant near Shanghai that will serve as its remanufacturing Hub across Asia. The 37,000 square foot plant will refurbish motors, pumps and a variety of other components, re-using most of the original materials and selling the components at a fraction of the price for new parts. The company already has 13 factories in China, some company-owned, some joint ventures.

Publicly, the company has said it plans to quadruple its business in China by 2010.

As part of the deal, it is expected that China will change some current regulations, such a categorizing used engines coming into the country as scrap metal, which carry high duties….

Trucking Volumes Continue to Decline, as Supply-Demand Balance Continues to Move in Shipper’s Favor

The American Trucking Associations said its seasonally adjusted for-hire Truck Tonnage Index dropped 1.8 percent in October after increasing 1.6 percent in September. The October level’s drop came as something of a surprise, according to an ATA spokesperson.

As shown below, the Index has fallen sharply and then remained pretty flat since the start of 2006, after several years of rapidly increases that placed huge stresses on capacity and rates…

Is a New Retail Era Coming? Wal-Mart Sales Continue to Slow

Wal-Mart continued to face sales challenges, as November same store sales at the core Wal-Mart stores were down .5%, a rarity for the chain but consistent with what appears to be a large sales slow down. Same store sales were up slightly at Sam’s Club, over in total sales at U.S. stores were just barely in negative territory.

Wall Street pressure is likely to force some changes. The chain strongly announced earler that it was going to be very aggressive this Christmas shopping season, and “make price an issue” – a tactic that it hoped would help the top line but many worried would put pressure on margins and profits. However, Wal-Mart is now forecasting same store sales growth of only 0-1% for December.

No less a commentator than The Street.com’s Jim Cramer recently wrote said that the retail giant's latest weak same-store sales number shows that there is a "big management issue" keeping the company from participating in the rally that has driven up sales at rivals like Target  and J.C. Penney…

Showing New Strategy, Coca-Cola Enterprises to Begin Distributing Arizona Ice Tea

The giant bottling arm of Coke announced it would begin distributing the popular Arizona Ice Tea brands from Hornell Brewing in February. To date, CCE, which though publicly trades has substantial ownership by Coke, has been almost exclusively focused on handling the Coke brands. The Wall Street Journal quotes a Coke spokesperson as saying, “Clearly, we would prefer that our bottlers distribute our brands.” Coke has iced tea brands such as Nestea (a joint effort with Nestle) but they have not been very successful in the market…

UPS Rate Increases Announced

UPS recently announced published rate increases for 2007 of about 5% on average, a larger increases than UPS implemented in 2006 but about what FedEx pushed. The move seems to underscoring confidence that demand for delivery services will remain strong.

UPS said list rates for ground shipments will go up 4.9% on average. The increase for air express and international shipments is based on a 6.9% rise in the base rate, minus 2 percentage points in the current fuel surcharge because of the declining price of oil.

Last year, the Atlanta company, which is the world's largest package delivery company, raised ground shipment rates by 3.9% and air and international service rates by 3.5%, excluding 2 percentage points related to fuel surcharges.

FedEx, the leader in air shipments, announced on Nov. 3 that it will increase its net average shipping rate for FedEx Express, including U.S. domestic and U.S. export express package and freight shipments, by 3.5% as of Jan. 1. The rise is comprised of a 5.5% average increase in standard list rates, offset by a 2 percentage point reduction in the fuel surcharge.

FedEx’s rate increases are about identical to what they announced for 2006…

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