Merger and Acquisition Momentum: 2022 Top 20 Warehouses

The increased focus on all things supply chain, fulfillment, distribution and shipping propelled third-party logistics (3PL) providers and refrigerated warehousing and logistics providers through a busy 2022 and set up them up for more success in the coming year. Investors took a bigger interest in the sector, which experienced some internal consolidation as 3PL operators acquired one another.

“The big themes this year were industry consolidation and company name changes,” says Evan Armstrong, president at Armstrong & Associates, a 3PL consultancy and research firm. The company tracks annual growth in the warehousing segment and reports that total commercial warehousing space for the Top 20 North American warehouses totaled roughly 842 million square feet situated in 3,461 different facilities. In 2021, 3PLs had about 767 million square feet of space and 3,214 facilities.

Some of the merger and acquisitions (M&A) activity affecting warehousing started in 2021 and included XPO Logistics’ spinoff of its global logistics segment, GXO. XPO has since become a pure-play contract logistics provider. Also in 2021, Maersk acquired e-commerce logistics provider Visible Supply Chain Management.

“Last year there were 25 M&A deals totaling $100+ million in the sector,” says Armstrong. “It was the most acquisitive year since we started tracking it
in 1999.”

That M&A momentum rolled right into 2022. By late-July Armstrong & Associates was already tracking 14 new M&A transactions. “The last few years have been very good for 3PLs,” says Armstrong. “We’re seeing more private equity investors acquiring 3PLs which, in turn, is driving some consolidation among regional players.”

The 2022 ranking

Armstrong compiles an annual list of the top North American warehousing companies. Each company has either provided square footage information or enough public information for the research firm to make a reasonable estimate of size.

With about 143 million square feet of warehousing space across 500 warehouses, DHL Supply Chain North America held onto its top spot as the largest 3PL in North America this year. And while Amazon’s estimated 232.5 million square feet of space in 370 warehouses technically tops the chart, Armstrong & Associates doesn’t give the company an official ranking number.

This year’s top five largest warehousing 3PL rankings included GXO Logistics (90 million/316 locations), Ryder Supply Chain Solutions (75.2 million/330 locations), NFI (60 million/162 locations) and GEODIS North America (52.1 million/144 locations). Each of these organizations maintained their respective positions on the list, compared to 2021’s rankings.

With 51.1 million square feet of space and 71 warehouses, CJ Logistics America (formerly DSC Logistics) took over the No. 6 spot on this year’s list (moving up from No. 12 in 2021) and in doing so effectively reordered the Top 10. Americold (46 million/201 locations), Lineage Logistics (45 million, 244 locations), Kenco (36.3 million/103 locations), Saddle Creek Logistics Services (31 million/80 locations) and FedEx Logistics (30.7 million/110 locations) rounded out this year’s Top 10.

The only new entrant on this year’s Top 20 list was Kintetsu World Express North America, which has 15 million square feet of space in 83 warehouses.

Top 20 North American Warehousing 3PLs

Rank Based on 2021 Warehousing Square Footage within North America)*

Attractive acquisition targets

One of the larger M&A transactions in warehousing happened in October when Pritzker Private Capital announced that it was buying Kenco Logistics, the latter of which was owned by the Kennedy family.

“For more than 70 years, Kenco has thrived as a family-owned organization,” said Denis Reilly, Kenco’s president and CEO, in a press release. “As the demand for innovative and reliable logistics solutions becomes greater than ever,” he continued, “we have found the ideal partner in Pritzker Private Capital to support our growth and advance our mission to be the preferred supply chain partner in North America.”

In assessing the deal, Armstrong says Kenco was an attractive M&A target for its established platform and large, established footprint. “Private equity investors will often invest in companies that they can build out through additional acquisitions,” he points out, “but Kenco already has significant operations in the United States. If they’re going to build the company out, it will be about international expansion.”

The outlook for 2023

Armstrong expects the North American 3PL sector’s total gross revenues to grow by about 8% in 2022. Looking further out, he says growth could be “pretty flat” in 2023 as the labor shortage, lack of warehousing space and rising interest rates continue to present challenges for the industry. If demand continues to decrease, 3PLs may become more reliant on their storage revenues. Because many of those facilities are full right now, those revenues may help buoy the sector in 2023. “Next year should probably be a flat year for valued warehousing and distribution 3PLs in the United States,” Armstrong says.

Cold chain trends

Each year, the International Association of Refrigerated Warehouses (IARW) publishes its North American Top 25 List of the largest refrigerated warehousing and logistics providers in Canada, Mexico and the United States.

The list is determined by total capacity—in millions of cubic feet—of temperature-controlled space operated by IARW warehouse members. The IARW is part of the Global Cold Chain Alliance (GCAA) with two other associations and one foundation. The IARW is the third-party temperature-controlled warehousing industry’s association.

Throughout 2022, the temperature-controlled warehouse market also continued to see M&A activity across North America. “The pace of acquisitions remained high and shifts in the 2022 top 25 indicate that big capacity facilities were the focus,” says Matthew R. Ott, GCAA president and CEO. “So much so that when this list comes out again in March 2023 a number of these companies will no longer be listed due to being acquired.”

In the North American market, GCCA also saw an increase in interest and investment outside of the United States and expects changes in the ranking of operators outside of the continental United States in the coming year.

For 2021, the top five refrigerated warehouse operators maintained their respective positions and included Lineage Logistics (1830 million cubic feet of space), Americold Logistics (1161 million), United States Cold Storage (432 million), Interstate Warehousing (115.7 million) and VersaCold Logistics Services (105.5 million).

Rounding out this year’s Top 10 list were Conestoga Cold Storage (64.3 million cubic feet of space), Congebec Logistics (60.9 million), RLS Logistics (59 million), Burris Logistics (58.9 million) and NewCold Holdings (47.9 million). With the exception of NewCold, the bottom half of the Top 10 list was completely reshuffled this year.

New entrants on GCCA’s 2022 list included Enstructure (21.5 million cubic square feet of space), SnoTemp Cold Storage (19 million), Valley Cold Storage & Transportation (18 million), Central Storage & Warehouse (16.6 million) and MWCold (15.2 million).

Top 20 North American Refrigerated Warehousing Companies

(Canada, Mexico and U.S.)

Source: International Association of Refrigerated Warehouses (IARW)

Key refrigerated warehousing trends

Overall, Ott says GCCA is seeing trends that lead toward increased refrigerated warehousing capacity in North America. Existing operators continue to invest in new facilities and expand existing facilities. Between January 2022 and September 2022, Ott says there were also “many new entrants in this space with an interest in development.”

“Construction costs and labor continue to be challenges, and continued supply chain issues mean that material is not always readily available,” he points out. “This has pushed construction timelines longer than many anticipated.” And while costs have normalized and materials are now more accessible, Ott says many 2022 deliveries are now being pushed to the first and second quarters of 2023.

More value-added services

From an operational perspective, the focus on the customer is a key priority for refrigerated warehouse providers. Ott has seen an increased emphasis being put on value-added services throughout the cold chain. “Shippers are turning to refrigerated warehouses increasingly for value-added services,” he says. “For instance, U.S. cold storage companies are serving the import/export border trade needs of shippers more and more often.”

At the United States/Mexico border, cold storage warehouses are increasingly adding USDA-approved lab/inspection facilities to their sites to service packing houses exporting protein to the United States and Canada. Ott says the trend is being driven by shippers and warehouse providers that are collaborating to optimize supply chains.

“More and more, warehouses are looking to become a full supply chain solution for their customers,” he adds, “and providing increased value-added services is an important part of this effort.”

Looking ahead

Labor will continue to be a challenge across the temperature-controlled warehousing and logistics industry, but the GCCA believes the headwinds contributing to the challenging market will begin to ease in 2023. Ott expects continued growth in refrigerated capacity in 2023. Concerns about inflation and rising interest rates may slow the pace of investment and development that the sector has seen over the last two years, however, and particularly for projects that have yet to break ground.

In the ever-evolving economic environment, there’s been a continued need to increase operational efficiency.

Companies are achieving this goal by making more investments in sustainability and automation—a trend that Ott sees continuing in the coming months.

“In 2023 the temperature-controlled warehousing and logistics sector will continue to do what we have been doing,” he says, “ensuring that the world has access to the safest, highest quality food, pharmaceuticals and goods possible.”