News / A cold chain sustainability challenge as Lineage Logistics eyes IPO

© Bj�rn Wylezich

According to some reports, Lineage Logistics is gearing up for a $30bn IPO this year.

This would put the cold chain solutions provider head and shoulders – as well as torso – above the rest of the field – rival Americold Realty Trust has a market cap of $8bn. And Lineage has more than 430 warehouses across 20 countries.

The cold storage market is on fire; according to the Cold Storage Construction – Global Strategic Business Report, the global market is worth about $11.6bn and projected to reach $32.8bn by 2030. Rising global demand for chilled or frozen goods calls for a massive increase in cold chain infrastructure, according to a study published a year ago by the Columbia Climate School.

The reefer market on the water is also going strong; the global reefer container fleet stands at around 1.5m units, and by one estimate, new vessel construction points to 3% growth in reefer plugs last year, 2% this year and 5% in 2025.

While the reefer trade promises ocean carriers more stable demand and rates than general containerised cargo, it does push up their energy requirements and carbon footprint. If 10% of a box ship’s capacity accommodates reefers, the energy demand is 30% higher, according to reefer provider SeaCube.

The combination of refrigerators, industrial chillers and transport with the associated energy demands has a powerful impact on the environment, the study from the Columbia Climate School pointed out.

“Together these impacts make global food system refrigeration responsible for up to 5% of global energy needs and 2.5% of total greenhouse gas emissions,” its authors wrote.

Supply chain activities make up 18% of the greenhouse gas emissions of the global food production system. This sets the industry on a collision course with tightening environmental regulations – from the Paris agreement, that aims for a net zero economy by 2050, to the European Corporate Sustainability Reporting Directive and California’s climate-related disclosure laws.

“The integration of ESG considerations into supply chain management is no longer a choice; it is a strategic imperative dictated by regulatory pressures and the evolving expectations of investors, consumers and the broader market. This is especially true for the food and beverage industry,” noted Geoff Coltman, SVP of consultant Catena Solutions.

Lineage Logistics published its first sustainability report (for 2022) last year. It has pledged to achieve net zero emissions across its global operations by 2040. Its same store emissions shrank half a percentage point, year on year, which suggests a long way to go toward that target.

Not surprisingly there is a lot of focus in the industry on technology, such as solutions that improve supply chain traceability, as this marries emissions reductions with heightened efficiency to improve the bottom line. However, there are doubts that such efforts could seriously move the needle on emissions. There is a growing consensus that collaborative solutions are necessary for significant change.

In December, Lineage joined the Move to -15°C coalition of industry participants to adjust the standard for frozen food, formed on the basis of research by international scientists led by the University of Birmingham. Their research concluded that the standard, which was set in the 1930s, could be raised by three degrees to -15°C without any adverse impact on the food.

Moving to the higher threshold would cut carbon dioxide emissions by 17.7m tonnes annually, the equivalent of taking 3.8m cars off the roads.

Participants in the initiative include AP Møller-Maersk, Kuehne + Nagel, MSC, DP World and Ocean Network Express.

Decarbonisation efforts have been largely associated with industrialised nations on the argument that developing economies lack the wherewithal and money. Last month, Carrier Transicold signed a collaboration agreement with the Greener Reefers in International Maritime Transport (GIZ) initiative to advance cold chain development in Costa Rica and South Africa. This focuses on training to technicians for reefer containers using natural refrigerants, which will emphasise sustainable solutions and energy optimisation.

The Columbia Climate School noted that cold chains were expanding rapidly within developing countries and emerging economies, and added that China’s cold chain market was expected to nearly double by 2026.

Its researchers stressed that climate-sensitive technologies and policies were necessary to decouple cold chains from their worst climate impacts and close the runway feedback loop of growth in the cold chain sector and emissions.