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Lineage Logistics To Acquire Emergent Cold

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Lineage Logistics To Acquire Emergent Cold

Consolidation in the cold storage industry is continuing at breakneck speed, with Lineage Logistics reportedly acquiring Emergent Cold.

Michigan-based Lineage Logistics was already ranked as the largest refrigerated warehouse company in the world by the International Association of Refrigerated Warehouses.

An article in The Wall Street Journal on Monday said the $900 million deal with Emergent would increase Lineage Logistics' footprint by 8% to more than 1.7 billion cubic feet. Emergent is a market leader in cold storage Australia and Vietnam.

San Francisco-based Bay Grove LLC is the principal investment firm backing Lineage, while Elliott Management in New York backs Emergent.

The acquisition will further broaden Lineage's footprint.

Emergent has warehouses in Australia, New Zealand, Vietnam and Sri Lanka, and in August announced it was acquiring New Orleans Cold Storage.

Lineage has warehouses in the United States, Belgium, China, the Netherlands, the United Kingdom and Vietnam.

In 2018, Lineage opened Cool Port Oakland in partnership with Dreisbach Enterprises and acquired Yearsley Group, a leading logistics service provider and frozen food distributor in the U.K. In May 2019, Lineage acquired Preferred Freezer Services, and in September 2019 acquired two cold storage facilities from Van Soest Coldstores in the Netherlands.

Consolidation in the refrigerated warehouse business provides economies of both scope and scale, says Ted Prince, the founder and chief operating officer at Tiger Cool Express, a company that provides temperature-controlled intermodal transportation in the U.S. with a fleet of 750 domestic, 53-foot reefer containers.

"Scale reduces your average cost and scope makes you a one-stop shop for customers," he told FreightWaves. Larger companies can achieve economies by reducing their cost of capital, information technology, including warehouse management systems.

Cold storage warehouses, especially those that handle frozen products, are expensive to build, and Prince noted that "like with any other asset you want to maintain high utilization — if you have scale and scope, you'll have a portfolio of customers that will help you achieve that."

Image by falco from Pixabay

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