Cold storage sector addressing excess inventory

Lineage Sees Cold Storage Market Stabilizing After Oversupply

Lineage, a leading operator of temperature-controlled warehouses, reports that the cold storage sector is beginning to recover from a period of overbuilding and inventory reductions following the pandemic.

According to the company, based in Novi, Michigan, cold storage capacity expanded by 14.5% between 2021 and 2025, while demand only rose by 5%. This has left the market with about 10% more capacity than needed. However, Lineage’s management expects market conditions to improve, as only a 1.5% increase in new capacity is projected for this year and customer inventories appear to have bottomed out.

For the fourth quarter, Lineage (NASDAQ: LINE) posted a net profit of $6 million. Adjusted funds from operations, which exclude items such as depreciation and restructuring costs, remained steady at $0.83 per share compared to the previous year.

Total net revenue for the quarter was $1.34 billion, matching last year’s figure but falling short of the $1.38 billion consensus estimate.

Table: Key performance indicators for Lineage

Operational Highlights

• Pallet throughput at comparable warehouses dropped 3% year-over-year, while storage revenue per pallet increased by 2%. Compared to the third quarter, these metrics declined by 1% and 4%, respectively.
• Physical occupancy for the quarter was 79.3%, down 50 basis points from a year ago but up 410 basis points from the previous quarter.
• Management noted that about 60% of U.S. markets are not experiencing excess supply, though regions such as Dallas, Houston, and New Jersey still face capacity surpluses.

Last year, Lineage closed 10 facilities, reallocating staff and resources to other locations. In the fourth quarter, the company sold a Southern California site for $60 million. Currently, 24 new facilities are under construction, expected to contribute $150 million in annual EBITDA. In 2025, Lineage reported $1.3 billion in adjusted EBITDA.

Looking Ahead

For 2026, Lineage anticipates net price increases of 1% to 2%, as the inventory drawdown following the pandemic has ended. The company has already renegotiated 65% of its contracts for the year, with forecasts assuming stable economic conditions.

Occupancy rates typically fall by about 300 basis points from the fourth to the first quarter, and management expects a similar trend this year due to ongoing pressure on import volumes.

Lineage is targeting $50 million in annual cost savings, with implementation planned through 2027. The company has also outlined plans to boost annual EBITDA by $110 million over the next three to five years through the deployment of its proprietary warehouse automation system, LinOS.

With more than 500 facilities and 3.1 billion cubic feet of storage across North America, Europe, and Asia-Pacific, Lineage also offers services such as freight forwarding, customs brokerage, drayage, and trucking soplutions.

Market Performance

As of 11:08 a.m. EST on Wednesday, shares of LINE were up 3.8%, outperforming the S&P 500’s 0.5% gain.