Lineage Logistics in $900mn acquisition
The company is thought to be spending more than $900mn for Emergent, with the transaction set to increase Lineage’s global footprint by around 8% to over 1.7bn cubic feet of capacity. The world’s largest refrigerated-storage company worldwide, Lineage boasts major customers such as Walmart, Tyson Foods, General Mills and Sysco.
It is expected that the acquisition will be finalised in 2020 and comes as shifting consumer tastes toward fresh foods and the rapid growth in online grocery sales fuel more demand for refrigerated storage.
“Food producers, manufacturers and retailers are looking for cold chain partners who can offer a dynamic and truly end-to-end temperature-controlled logistics solution, and one that can reach every corner of the world,” said Greg Lehmkuhl, President and Chief Executive Officer of Lineage. “Welcoming Emergent to the Lineage family not only adds significant capacity to our international footprint, but also deepens our commitment to our port strategy and international trade. We are better able to help customers respond to constantly shifting market dynamics, such as global network optimisation, tariff impacts, consumer preference shifts, and much more, while at the same time unlocking new potential market opportunities to sell their goods.”
Having been founded in 2017 by Elliot Management and Neal Rider, Emergent will provide Lineage with an experienced management team with a proven track record of growth and long-standing relationships with customers in global markets. The news will see Lineage operate its 1.7bn cubic feet of temperature-controlled capacity across 260 facilities in 10 countries, with a global footprint that features North America, Europe, Asia, Australia and New Zealand.
“Joining Lineage accelerates our goal of providing the highest quality global cold chain solutions to our customers,” commented Neal Rider, Emergent’s founder and Chief Executive Officer. “Lineage has established itself as a leader in our industry, and expanding its global footprint and port presence with the addition of Emergent will create incredible opportunities for our collective customers.”
Supply Chain Digital Verdict
The logistics space is in a state of expansion with an increasing number of companies beginning to expand into new markets in a bid to gain a competitive edge. This move by Lineage will provide substantial expansion to its international visibility and offer new market opportunities.
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Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany