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Amazon Air bumps cargo handler from Newark airport

Alliance Ground International, a Miami-based cargo handling services provider, said Tuesday it has opened a new import handling facility five minutes from Newark Liberty International Airport after getting displaced from its existing airport warehouse by Amazon Air.

Two other ground agents, along with 22 airline customers, are also losing a home this fall, leaving logistics companies in the region wondering if their shipments will be negatively impacted.

Alliance Ground International will shuttle inbound shipments directly from aircraft to the 76,000-square-foot facility by truck. The new building features 19 dock doors, charging stations for refrigerated containers, cold storage, pharmaceutical handling areas, increased security and easy access to major highways.

AGI said it is also relocating within the airport from its 75,000-square foot existing facility to a 24,000-square-foot terminal that will be dedicated to outbound cargo. Both locations are under long-term leases.

Isolating inbound and outbound freight to dedicated warehouses, one of which is off airport property, is expected to reduce wait times and truck congestion on airport service roads, AGI said. The setup is similar to one AGI recently implemented at Chicago O’Hare International Airport to help reduce backlogs created by record cargo volumes. 

“It is a solution we have tried and tested at our other locations, and it will speed up processing, making for a more efficient and cost-effective operation,” said CEO Jared Azcuy in a statement. 

The move was forced by the Port Authority of New York/New Jersey, which is not renewing the expiring leases held by AGI, Worldwide Flight Services and Choice at two large cargo buildings.

Earlier this month, the Port Authority Board of Commissioners authorized staff to enter into a 20-year concession with Amazon Air to redevelop and expand Newark Liberty’s cargo facilities. 

Under the public-private partnership agreement, Amazon (NASDAQ: AMZN) will pay $257 million in rent — including a lump sum upfront payment of $150 million — and invest $125 million in renovations.

The PANYNJ said the lease, which covers about 250,000 square feet of cargo space on 23 acres, is in final negotiation and expected to take effect later this year.

The modernized facilities will serve as Amazon Air’s East Coast regional hub, bookending its new West Coast hub at San Bernardino International Airport. Having the ability to sort and route shipments in Newark will add speed and lower costs for Amazon’s delivery operations because packages going to Northeast consignees won’t have to be sent to the shipping giant’s new national hub at Cincinnati/Northern Kentucky International Airport.  

The exponential growth of Amazon’s air network since launching five years ago is enabling the company to deliver more than 60% of online orders the next day and better compete with FedEx (NYSE: FDX) and UPS (NYSE: UPS) in the parcel market. FedEx operates its third-largest sortation hub at Newark Liberty airport. UPS also has a facility there.

Brandon Fried, executive director of the Airforwarders Association, said replacing public warehouses that served a vast shipping community with a private Amazon facility will create  supply chain inefficiency.

Many freight forwarders serving the New York metropolitan area use Newark as a relief valve to congested John F. Kennedy International Airport. 

“Alternative offerings by the Port Authority are insufficient, which will force airlines to move their freight handling away from the airport, thus creating a significant inconvenience for forwarders tendering and retrieving shipments there,” he said in an email.

The forwarding industry is closely monitoring the situation, he added. 

Azcuy said the new facilities and digital capabilities “mean that AGI is more than ready to support customers in New Jersey.”

The new warehouse includes electronic flight boards, mobile technology for ramp operations and truck appointment systems.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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