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Lineage IPO could deliver $3.9B in proceeds

'Lineage' logo on the side of a warehouse with trailers parked beneath

Cold storage real estate investment trust Lineage Inc. announced the pricing of its initial public offering on Tuesday, which values the company at roughly $19 billion.

The offering includes 47 million shares of common stock and a customary 30-day, 15% option (an additional 7.05 million shares) to deal underwriters. The company’s stock will be listed on the Nasdaq under the ticker “LINE.” The price range was set at $70 to $82 per share.

Net proceeds ranging from $3.4 billion to $3.9 billion (assuming the deal underwriters can exercise the option) will be used to repay debt, fund cash grants to certain employees and pay transaction expenses. Any additional proceeds will be used for general corporate expenses or will be invested in short-term instruments.

The Novi, Michigan-based temperature-controlled warehouse operator manages 482 locations with 3 billion cubic feet of space across North America, Europe and the Asia-Pacific region. Nearly two-thirds of the facilities are in North America. In addition to being a landlord, it provides other services like freight forwarding, customs brokerage, drayage and truck transportation.

Lineage is backed by private equity firm Bay Grove and has raised more than $13 billion in capital since its 2008 inception.

For the 12-month period ended March 31, the company generated $5.3 billion in revenue, $1.8 billion in net operating income and $1.3 billion in adjusted earnings before interest, taxes, depreciation and amortization.

Morgan Stanley, Goldman Sachs, BofA Securities, J.P. Morgan and Wells Fargo were listed as lead book-runners on the deal, which included a total of 28 investment banks.

More FreightWaves articles by Todd Maiden

Autos from Mexico to US helped cross-border trade surge to $73B in May

Boosted by shipments of cars, computers, auto parts and commercial vehicles to the United States, Mexico was the top U.S. trade partner in May, at $73 billion, according to data from the Census Bureau.

It was the fifth consecutive month and 15th of the past 16 months Mexico has been No. 1 in trade with the U.S. The $73 billion trade total in May was a 6.3% increase from the same period in 2023.

Canada ranked No. 2 for trade with the U.S. in May at $66 billion, and China ranked third at $46.1 billion.

Mexico’s exports to the U.S. totaled $44 billion in May, a 6.6% year-over-year increase, while imports from the U.S. to Mexico increased 6% to $29 billion.

For the 14th straight month, Laredo, Texas, retained the No. 1 spot among the nation’s 450 international gateways for trade, according to Census Bureau data analyzed by WorldCity.

During May, Laredo recorded a 4.7% year-over-year increase in total commerce to $29.3 billion.

The Port of Los Angeles ranked No. 2 and reported $26.1 billion, while Chicago O’Hare ranked No. 3 at $23.4 billion.

Mexico accounted for $28.6 billion in trade at the Laredo port of entry in May, followed by China at No. 2 reporting $173 million and France at No. 3 with $87 million.

The top U.S. imports from Mexico in May were cars ($4.17 billion), computers ($3.67 billion), auto parts ($3.2 billion), commercial vehicles ($3.2 billion) and insulated wire and cables ($1.5 billion).

Top exports from the U.S. to Mexico during the month were gasoline and other fuels ($2.93 billion), auto parts ($1.93 billion), computer chips ($990 million), computer parts ($880 million) and low-value shipments ($820 million). 

Mexico is the world’s seventh-largest passenger vehicle manufacturer and the top exporter of cars to the U.S., totalling $69 billion in 2023, according to the Census Bureau

In 2023, auto factories in Mexico produced 3.3 million cars, exporting 77% of them to the U.S. The rest of the cars were shipped to Canada, Germany, Brazil, Colombia, Puerto Rico, Saudi Arabia, the U.K., Japan and Chile.

New vehicle sales in the U.S. totaled over 1.4 million in May, representing an increase of 8.8% from April and 5% increase from the same year-ago period, according to Marklines. In June, new car sales in the U.S. totaled 1.3 million units, a 3% year-over-year decline.

U.S. car sales have been a boon for foreign automotive manufacturers with factories in Mexico, according to Odracir Barquera, managing director of the Mexican Association of the Automotive Industry (AMIA).

“In the first six months of 2024, we see a period of expansion in production and exports, with this being the best June in the last six years,” Barquera said during a recent monthly AMIA video news conference.

Mexico City-based AMIA is a chamber association formed in 1951 to represent the interests of foreign vehicle manufacturers established in Mexico, including Audi, BMW, FCA, Ford, GM, Honda, JAC, KIA, Mazda, Nissan, Toyota and Volkswagen.

Barquera said he expects production at Mexico-based automotive factories to remain high for the rest of the year.

“We are in a new phase of expansion of light vehicle production,” Barquera said. “The post-pandemic recovery was resolved in the first few months and we are in a new phase of expansion in production and export.”

Weekly Fuel Report: July 16, 2024

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FBX Report: July 16, 2024

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Victory for a 3PL again — TQL — in case involving broker liability 

Another brokerage company has won a court battle holding that a 3PL is not liable for an accident that involved a carrier the company hired to move freight.

TQL, the logistics company in the case, was heard by the 11th Circuit Court of Appeals. A three-judge panel unanimously held last week that TQL could not be held liable for a fatal accident on a Georgia road in 2020.

Katia Gauthier, the widow of Peter Gauthier who was killed in the accident, originally filed suit against the carrier, Hard to Stop, and TQL in a Georgia court. But the lawsuit was transferred to the U.S. District Court for the Southern District of Georgia.

TQL did not participate in the settlement that ended the case in early 2022. Instead, it  successfully obtained a decision from the lower court that TQL could not be held liable for the death of Peter Gauthier, citing its protections from the Federal Aviation Administration Authorization Act (FAAAA).

Given that the lower federal district court already had ruled in TQL’s favor, the decision by the appellate court does not break new ground. However, it adds to the growing body of law that protects a brokerage from being held liable for an accident or other occurrence that happens involving a carrier it hired.

The fatal collision took place in May 2020 on a Georgia state road and resulted in Peter Gauthier, who was driving a car, being killed. According to the lawsuit, a driver for Hard to Stop made what the plaintiff — Gauthier’s widow Katia — said in a brief with the appellate court was a “negligent, reckless and illegal U-turn in the middle of the road” that he could not successfully complete. 

The truck, according to the brief, ended up blocking several lanes of traffic, which was “made worse by the fact that many lights on the tractor and trailer were not functioning properly, the headlights were not properly adjusted, and the reflective tape marking on the tractor and trailer was not maintained in accordance with industry and federal regulations.”

Peter Gauthier “was unable to avoid colliding with the trailer.” 

In the lawsuit filed against Hard to Stop and TQL, Katia Gauthier said TQL “had a duty to act with reasonable care” and that it had “breached that duty when it negligently hired, contracted with, and/or retained (driver) Shingles, when it knew or should have known of Shingles’s terrible record, including multiple speeding tickets, driving with a suspended license, battery, and constructive possession of controlled substances.”

Gauthier ultimately reached a settlement with Hard to Stop and other affiliated defendants. But the lower court cited the FAAAA in ruling that TQL was not liable for what happened to her husband.

The recent legal scorecard on questions of broker liability have been mostly in favor of the 3PL industry. 

  • Almost a year ago exactly, the Seventh Circuit dismissed an appeal from Ying Ye, the widow of a motorcycle driver who was killed when he collided with a truck operated by Global Sunrise and booked by 3PL GlobalTranz. The lower court cited the protections of the FAAAA in dismissing an appeal of a lower court decision from Ye. She took her appeal to the Supreme Court but was denied certiorari in January.
  • On a state level, an Illinois appellate court in September, Alliance Shippers, a 3PL, was removed as a defendant in a case brought by the mother of a minor hit by a Dakota Lines truck and who suffered extensive injuries. Given that it was a state case, it did not cite the FAAA as the reason for its decision and it did not set a precedent for other federal cases. In a recent commentary about the case, Eric Zalud, partner and Co-Chair of Benesch’s Transportation & Logistics Practice Group, said of the Dakota Lines decision: “For broker liability cases that, for whatever reason, are not federally preempted, this case is a veritable mother lode of ammunition to defend against allegations of vicarious liability on behalf of the broker, in either freight loss and damage, or casualty scenarios.” He also described the past months as “a very good year for brokers; in the courts, that is!” 
  • The appellate court in the Gauthier case is the same 11th Circuit that handed down the Landstar case involving a load that was stolen, and it cited its findings in that lawsuit to argue why TQL could not be held liable. The Landstar (NASDAQ: LSTR) case is known as Aspen American Insurance, which was the plaintiff that sued Landstar after it paid off the shipper. The case from April 2023 did not involve a collision or a death; rather, it focused on a fake carrier who tricked Landstar into giving it a shipper’s cargo and then disappeared. 

In its ruling, the 11th Circuit said in the Gauthier case that it was “(adopting) the same reading

of the (FAAAA) in Aspen American Insurance Company v. Landstar Ranger, Inc.” and held that the Act preempts state law claims against “a transportation broker” who was allegedly “negligent … in its selection of [a] carrier.”

The core foundation of the FAAAA is that a state may not pass a law or regulation that could impact a “route, price or service.” “Courts in this circuit and others have held that (FAAAA)  preempts negligence-based claims against brokers or motor carriers when the subject matter is sufficiently ‘related to’ their prices, routes, or services,” the Fourth Circuit wrote.

The 4th Circuit decision noted that the FAAAA does have a safety exemption, a fact that has come up in previous litigation. 

But in other cases, including the Gauthier case, courts have noted that the safety exemption applies to “motor vehicles.” The court in Gauthier cites its earlier precedent in Aspen vs. Landstar that says the safety exemption from FAAAA “requires that the relevant state law ‘have a direct relationship to motor vehicles.’” But the court found, as others have, that a broker can not be considered a motor vehicle under the safety exemption. 

The one significant case with a precedent that remains on the books and which has trucking-focused lawyers concerned is Miller vs. C.H. Robinson. A 9th Circuit finding that held C.H. Robinson was liable for an accident that left Allan Miller a quadriplegic when he was struck by a truck hired by C.H. Robinson (NASDAQ: CHRW) was appealed to the Supreme Court, but was denied certiorari in 2022. 

The safety exemption ultimately was the argument in Miller vs. C.H. Robinson as to why the FAAAA did not exempt the broker from liability. C.H. Robinson settled the case, but the decision could be used as the basis for a decision damaging to a 3PL in other federal litigation. 

More articles by John Kingston

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Trump’s VP pick supports truck parking, opposes speed limiters

J.D. Vance

Former President Donald Trump, a vocal supporter of the trucking industry while he was in Washington – particularly owner-operators – has picked a running mate who is on the record for supporting two of truck drivers’ top legislative priorities.

Ohio Republican Senator J.D. Vance, who was named by Trump as his pick for vice president on Monday at the Republican National Convention in Milwaukee, is a co-sponsor of the Truck Parking Improvement Act, which dedicates $755 million in grant money over the next three years specifically for expanding truck parking.

He is also a cosponsor of the DRIVE Act, which would prohibit the Federal Motor Carrier Safety Administration from requiring trucks to be equipped with a speed limiting device set to a maximum speed, a highly controversial rulemaking that FMCSA has scheduled for May 2025.

Both bills represent major lobbying efforts by the Owner-Operator Independent Truck Drivers Association.

“We’re a non-partisan organization, but unabashedly pro-trucker,” OOIDA spokesman George O’Connor told FreightWaves. “We’ll work with anyone and everyone who supports our members’ priorities, regardless of party affiliation. There’s no question that it’s helpful to have someone advising the President with a proven pro-trucker legislative record.”

Vance, known for his populist conservatism that sometimes runs counter to traditional Republican viewpoints, supports a Rail Safety Bill that Democrats in Congress have been trying to get passed in the aftermath of the Norfolk Southern train derailment in East Palestine, Ohio, Vance’s home state.

At the same time, he wants to repeal tax incentives for electric vehicles, including those for commercial trucks.

Trump himself stirred up populist support among owner-operators in May 2020 when they got the former president’s attention during a weeks-long rally/protest along Constitution Avenue in Washington. Drivers were protesting against brokers who were allegedly gouging them on rates and taking an unfair advantage in the spot market.

Brokers refuted the allegations, countering that there was simply not enough freight to support the amount of carrier capacity that was still in the market during the initial stages of the pandemic. 

Disclosure: J.D. Vance is an investor in FreightWaves SONAR through the Rise of the Rest fund.

Click for more FreightWaves articles by John Gallagher.

Diesel prices fall after 4-week rise

After four weeks of increases, the price used for most fuel surcharges fell in the latest posting by the Department of Energy/Energy Information Administration. 

The average weekly retail diesel price posted by DOE/EIA declined 3.9 cts/gallon to $3.826. It puts the price just two cents more than where it stood last year at this point in the calendar. 

After going through a period of volatility that could be measured in years, oil markets have fallen into a tight trading range that one leading energy economist called “very dull.”

In his weekly report, energy economist Philip Verleger used the term “dull” to describe markets. He did say that diesel market prices show evidence of tightness but were tighter at this time of the year in 2022 and 2023. The market is suggesting that “upward price pressure from the distillate complex will be muted,” he said. Diesel is a distillate, as is jet fuel and heating oil.

The softness in the market is evident in some physical markets. For example, according to DTN, the price of physical ultra low sulfur diesel in the Buckeye Pipeline system, which serves parts of the Northeast and the Ohio Valley, was 15.5 cents less than the CME price of ultra low sulfur diesel on Friday. On July 1, it was even with the CME ULSD price. 

The Chicago market Monday was 21 cents less than CME ULSD. It was minus 3 cents on July 1.

Last week’s EIA inventory report reported that stocks of ULSD in the U.S. were 113.8 million barrels. That was a significant jump of about 4.5 million barrels in one week, though it followed a few weeks of decline.

At that level, they are not far from the average of the first week of July, excluding the bloated numbers of 2020, of 118.2 million barrels going back to 2016.

The monthly report of the International Energy Agency released last week continued its theme of a market that while it continues to deal with cuts from the non-OPEC group, still remains in a supply-demand standoff. 

“World oil demand continues to decelerate, with second quarter 2024 growth easing to 710,000 b/d year-on-year, the slowest quarterly increase since 4Q22,” the IEA said in its report. “Chinese consumption contracted, as the country’s post-pandemic rebound has run its course. Global gains are forecast to average just below 1 mb/d in 2024 and 2025, as subpar economic growth, greater efficiencies and vehicle electrification act as headwinds.”

Meanwhile, on the supply side, the IEA said global supply climbed 150,000 b/d. “Solid monthly gains pushed second quarter output 910,000 b/d higher quarter-on-quarter,” the IEA said. “Growth of 770 kb/d is seen for 3Q24 with non-OPEC+ providing 600 kb/d of the gains. Annual increases of 770 kb/d are forecast in 2024 with gains of 1.8 mb/d next year.”

The inability of the oil market to move higher is not because the OPEC+ group is failing to reduce output. While many of its members may be producing above their agreed-upon quotas, the reality is that OPEC+ output is down 680,000 barrels/day since December, according to the latest monthly survey from S&P Global Commodity Insights. 

It all adds up to a market there while there has been some volatility in the futures price of ULSD in late June and early July, but for now markets appear to have quieted. 

The ULSD price on CME settled at $2.5169 on June 28. Four days later, it climbed to a settlement of $2.6343/g but within another four days was back down to $2.6182/g. It settled Monday at $2.5136/g, just 0.33 cts/g less than where it was on June 28.

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Teamsters President Sean O’Brien to speak at RNC in historic first

Teamsters General President Sean O’Brien is set to speak at the Republican National Convention on Monday night.

A Teamsters post on X/Twitter showed O’Brien meeting with Massachusetts delegates at the RNC Monday morning in Milwaukee, Wisconsin. He is scheduled to formally speak at the RNC at 8 p.m. EST Monday night.

“Wherever we can find common ground, our focus must always be on protecting American workers,” O’Brien told delegates, cited in a post by the Teamsters on X/Twitter. “If we’re going to accomplish big things for labor and truly hold employers across the country accountable to the workforce, we need as many people as possible moving in the same direction to get the job done.”

According to a report by Politico, O’Brien has requested speaking slots at both parties’ conventions. Some members aren’t happy about the union possibly endorsing former President Trump, with Teamsters Vice President At-Large John Palmer writing an opinion piece criticizing O’Brien for planning to speak at the RNC.

The International Brotherhood of Teamsters has yet to finalize its decision to back candidates Joe Biden or Donald Trump for the Oval Office this November. The union boasts the largest membership in the U.S. with 1.3 million members, and is seen as a powerful voting block.

No timeline has been announced for when a Teamsters endorsement will be made for either candidate. The union made its 2020 endorsement announcement of Biden for president in August that year.

“Rank-and-file Teamsters will dictate any possible endorsement from our union,” Teamsters spokesperson Kara Deniz told FreightWaves in an emailed statement. “Since the end of 2023, we have convened historic member roundtables with all Presidential candidates and have conducted unprecedented town halls at roughly 300 local unions across the country. We are getting our members’ input in a variety of ways and using that to inform whatever decision is made.”

Deniz said that O’Brien’s speech at the RNC Monday night is “truly unprecedented” as it will be the first time a Teamsters General President has addressed the RNC.

“Our 1.3 million members work in all 50 states, represent every political background, and their message needs to be heard by as wide an audience as possible, and that includes all political candidates running for elected office,” Deniz said.

Founded in 1903, the Teamsters have endorsed Democrat candidates Joe Biden, Hillary Clinton and Barack Obama since 2008. However, in earlier elections, they have picked Republicans, and were the only major union to endorse former President George H.W. Bush in the 1988 U.S. presidential election.

“The Teamsters’ Presidential endorsement process this cycle is the most democratic, inclusive, and transparent it’s ever been in our 121-year history—​t​o move this union forward and ensure our members’ voices come first,” Deniz said. “Our members’ votes will not be taken for granted.”

Cass data melts lower in June

Side view of a white tractor pulling a white dry van trailer on a highway.

June data from Cass Information Systems showed continued weakness in volumes and expenditures, with year-over-year declines largely mirroring the trends displayed in May.

Shipments captured by the Cass Freight Index fell 6% y/y in June and were off 1.8% from May, “amid ongoing softness in for-hire [truck] demand,” a Monday report compiling freight stats from several transportation modes said.

The shipments subindex fell to its lowest point since January despite June typically being a big month for freight flows. When seasonally adjusted, the index reached its lowest level since July 2020 when widespread COVID-related lockdowns were starting to be lifted.

The 6% drop was the highest rate of decline in five months. Compared to two years ago, the subindex was down 10.4%, which was a second straight double-digit decline after logging low- to mid-single-digit declines earlier in the year.

The previous forecast called for the dataset to dip just 4% y/y in June.

The report pointed to an increase in the number of private companies using internal assets to move their freight during this period of “slowing economic growth” and “broadly flattish” goods demand, as reason for the weakness.

“We see the insourcing of freight via private fleet capacity additions as the main driver of the y/y decline in for-hire volumes,” the report said.

The outlook for the shipments’ subindex calls for volumes to be off 4% y/y in July and down 5% y/y for full-year 2024.

“If there’s any silver lining, this is starting to look like a real bottom,” the report said, as the y/y comps get easier moving forward.

June 2024
y/y
2-year
m/m
m/m (SA)
Shipments-6.0%-10.4%-1.8%-1.8%
Expenditures-9.4%-31.6%-3.0%-3.2%
TL Linehaul Index-2.4%-16.2%-1.0%NM
Table: Cass Information Systems (SA – seasonally adjusted)

Freight expenditures were down 9.4% y/y in June, in line with the decline recorded a month ago, but 3.2% below May on a seasonally adjusted basis. On a two-year comparison, expenditures fell more than 30%, which was the largest decline recorded by the 34-year-old dataset. However, the expenditures data can be volatile as it is impacted by modal mix shift as well as fluctuations in fuel and accessorial charges.

The expenditures subindex was down 16% y/y in the first half of the year and is expected to decline 11% to 12% on a full-year comparison, which is unchanged from the month-ago forecast.

The y/y decline in the expenditures subindex was 340 basis points more pronounced than that of the shipments subindex. The implication is that actual core freight rates were likely off by similar percentage. Inferred rates were 3.6% lower y/y in June and 1.4% below May when seasonally adjusted.

Inferred rates for full-year 2024 are now expected to be down 7% y/y, 100 bps lower than the update provided last month.

The Truckload Linehaul Index, which displays core rates excluding fuel and accessorial charges, fell 1% from May and was down 2.4% y/y. The linehaul index includes spot and contract freight.

“The freight market continues to be characterized by overcapacity, and with private fleets engaging in spot activity more than in past cycles, rates remain only slightly above the Q4’23 lows,” the report said. “Owner-operators are resilient as ever, but ongoing private fleet capacity additions are putting less freight into the for-hire market in a slowing economy.”

Chart: (SONAR: NTIL.USA). The National Truckload Index (linehaul only – NTIL) is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. To learn more about FreightWaves SONAR, click here.

Data used in the indexes is derived from freight bills paid by Cass (NASDAQ: CASS), a provider of payment management solutions. Cass processes $38 billion in freight payables annually on behalf of customers.

More FreightWaves articles by Todd Maiden

DHL Express outsources 777 operation to Chinese airline

A freighter with the dual logos of Singapore Airlines and DHL approaches an airport for landing.

DHL Express will hand Central Airlines a pair of Boeing 777 freighter aircraft to operate on its behalf on routes from China. This will be the first time the global logistics integrator has partnered with a domestic Chinese airline to support its air cargo network. 

DHL’s deployment of cargo jets to Central Airlines provides extra capacity for Chinese companies to reach global markets, especially e-commerce platforms that are heavily booking commercial aircraft to fulfill cross-border consumer orders and in the process crowding out many other shippers.

A spokesperson for DHL declined to say when the Central Airlines flights would commence, but Cargo Facts reported DHL will transfer the freighters later this year. The two 777 freighters will be co-branded with the DHL and Central Airlines logos. 

Central Airlines will be responsible for providing pilots, maintenance and insurance for the DHL-supplied aircraft.

“China is not only the world’s factory, but also a global marketplace, and remains the largest shipper on trans-Pacific trade routes in the DHL Express network, as well as Europe’s largest trading partner. The partnership with Central Airlines is part of our long-term investment in aviation in China to continue developing new routes, increase route flexibility and optimize our aviation network,” said Travis Cobb, executive vice president global network operations and aviation at DHL Express, in a news release on Monday.

DHL Express operates more than 300 aircraft around the world through a combination of in-house airlines and partner carriers that operate under the DHL Aviation umbrella. The aircraft operated by Central Airlines will come from DHL’s fleet, but it is unclear if they will be existing aircraft or new deliveries from Boeing. DHL currently has 29 factory-built 777 freighters operated by AeroLogic, DHL Air UK, Kalitta Air, Polar Air Cargo, and Singapore Airlines, as well as open orders with Boeing for six more of the widebody aircraft.

DHL recently hired Northern Air Cargo to operate a small freighter in the United States.

Central Airlines began operating in May 2020 with a Boeing 737-300 converted freighter. The fleet now consists of 10 aircraft: three 737-300s, five 737-800s and two Boeing 777s that operate between Shenzhen; Tianjin; Riyadh, Saudi Arabia; and Paris on a dedicated basis for small package logistics provider YunExpress. 

Chinese e-commerce logistics company Zongteng launches cargo airline