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Amazon opens 85,000 square foot delivery station on 20-acre site at 555 MacArthur Boulevard in Mahwah NorthJersey.com

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Amazon is negotiating a $432 million, 20-year lease for two cargo buildings at Newark Liberty International Airport, a project that could speed up deliveries in the New York metro area.  

​T​​​​​he Port Authority of New York and New Jersey agreed to enter contract talks Thursday with the Seattle-based shipping giant, with a final agreement expected by November.

The authority's board voted unanimously to choose the online retailer over two other firms that bid on the 23-acre, 250,000-foot site.  

As part of the deal, the Port Authority will get $150 million upfront in building rent, and an additional $157 million in land rent over two decades. Amazon will also invest about $125 million in the facility, including a building rehabilitation expected to start this year and finish by early 2023. About 1,000 new jobs are expected to be created to operate the new facility, with preference for local hiring, Port Authority officials said.

"They’ve indicated that they look to this new facility to be their regional hub on the East Coast," said Rick Cotton, executive director of the Port Authority, at Thursday's board meeting. "This will not be a distribution warehouse, this will be with major air cargo coming into this facility, and my understanding is they will dispatch that and in new, large shipments that will go out to actual last-mile distribution warehouses."

"Last mile" refers to the last phase of getting products from manufacturers to consumers. In Amazon's distribution process, packages are shipped to delivery stations from Amazon fulfillment and sorting centers.

In June, the company announced it would be building a "last-mile warehouse" in Rutherford, about 15 miles away from Newark airport. An Amazon distribution center opened in Lodi earlier this year and a delivery center in Mahwah in 2020.

As part of the deal, the company would commit toincluding contracts with minority-, women- and veteran-owned businesses at the site, installing solar panels and using zero-emissions ground service equipment. Renovations of the buildings will need to "meet industry-leading building energy efficiency standards," according to the Port Authority presentation about the deal.

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“We are excited about the outcome of today’s vote, recommending Amazon as the best partner to occupy air cargo space at Newark Liberty International Airport. While the lease remains subject to final negotiation, this is a positive step forward,” an Amazon spokesperson said in a statement.

The $150 million in upfront cash the Port Authority would receive comes at a critical time for the bi-state agency's budget with revenues still significantly below pre-pandemic levels. Net operating income for the first six months of this year was $882 million, down $178 million, or 17%, compared to the nearly $1.06 billion in the first half of 2019, the Port Authority said.

It's the latest sign of Amazon's growing reach in air transportation. With the move, Amazon will further encroach on the delivery business of shipment behemoths such as FedEx, which operates its third-largest sorting and processing hub out of Newark.

In January, Amazon purchased 11 jets from Delta and WestJet airlines, which should allow it to rely less on delivery competitors like UPS and the U.S. Postal Service.

The Newark expansion means Amazon will no longer need to send packages to its planned national hub in Kentucky, according to Dean Maciuba, managing partner for North America for the logistics firm Last Mile Experts. Packages and shipments going to Northeast addresses will stay on the East Coast, getting to their destinations faster and cheaper.

"Between 60% and 65% of all Amazon orders are delivered next day now, and that’s because of their air network and all of their fulfillment centers and hubs," Maciuba said. "It’s going to help them support next-day Prime throughout the Northeast, but the New York metro area is especially going to benefit."

Colleen Wilson covers the Port Authority and NJ Transit for NorthJersey.com. For unlimited access to her work covering the region’s transportation systems and how they affect your commute, please subscribe or activate your digital account today. 

Email: cwilson2@gannettnj.com 

Twitter: @colleenallreds 

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