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The cold storage sector, spearheaded by industry giant Lineage, is navigating a significant shift from an era of excess capacity. Bolstered by extensive facility development and the ebb and flow of post-pandemic inventory cycles, the market is now finding a more stable equilibrium. Despite a substantial increase in cold storage space over recent years, demand had not kept pace, leading to a temporary oversupply. However, strategic adjustments by companies like Lineage, coupled with a forecasted deceleration in new capacity additions and a stabilization of client inventories, point towards a healthier market environment in the near future.

Cold Storage Giant Lineage Reports Market Rebalancing Amidst Oversupply Correction

Novi, Michigan, February 25, 2026 – Lineage, a leading temperature-controlled warehouse operator headquartered in Novi, Michigan, announced a significant market rebalancing as the industry works through a period of oversupply. The company's management revealed that from 2021 to 2025, new cold storage construction expanded capacity by an estimated 14.5%, while demand grew by a comparatively modest 5%. This disparity resulted in an approximate 10% market surplus.

However, Lineage anticipates a firming of market fundamentals, projecting only a 1.5% increase in capacity this year. Furthermore, customer inventories, which had been undergoing a destocking phase following the pandemic, now appear to have reached their lowest levels, suggesting an impending rebound in demand. The company's outlook for 2026 includes projected net pricing increases of 1% to 2%, with 65% of its contracts already repriced for the year. This optimistic forecast is based on the assumption of no major shifts in the broader economy.

Lineage reported a net income of $6 million for the fourth quarter, with adjusted funds from operations (AFFO) remaining steady year-over-year at 83 cents per share. Consolidated net revenue for the quarter stood at $1.34 billion, consistent with the previous year but slightly below analyst expectations. Although same-warehouse pallet throughput saw a 3% decline year-over-year, storage revenue per pallet increased by 2%. Physical occupancy for the quarter was 79.3%, a slight decrease from the previous year but a notable improvement from the prior quarter.

The company's strategy for addressing regional oversupply has involved idling 10 sites last year, reallocating resources, and selling a facility in Southern California for $60 million. Lineage currently has 24 facilities under construction, expected to contribute an additional $150 million in annual EBITDA. The company also has plans for $50 million in annual cost reductions to be implemented through 2027. Looking ahead, Lineage previously outlined a strategy to generate an extra $110 million in annual EBITDA over the next three to five years through the deployment of its proprietary warehouse automation system, LinOS. Lineage currently manages over 500 facilities globally, encompassing 3.1 billion cubic feet of space across North America, Europe, and the Asia-Pacific region, in addition to offering freight forwarding, customs brokerage, drayage, and truck transportation services.

This market adjustment highlights the dynamic nature of global supply chains and the need for agile operational strategies. Lineage's proactive measures to manage capacity and optimize its network are crucial for navigating these fluctuations. The eventual stabilization and growth in the cold storage market will depend heavily on sustained economic recovery and continued innovation in logistics technology. Businesses relying on cold chain solutions should pay close attention to these developments, as they directly impact storage costs, availability, and overall supply chain efficiency.