This is the railroad bridge over Broening Highway than runs… (Algerina Perna / Baltimore…)
The huge warehouse planned for Southeast Baltimore fits the profile of online retailer Amazon's rapidly expanding distribution network, according to shipping industry analysts.
The 1 million-square-foot facility is so big it only makes sense for a handful of companies, such as Amazon or Walmart, the analysts said.
A Walmart spokeswoman said Friday the Arkansas-based company has no plans to build a terminal in the Baltimore-Washington region. Amazon did not return messages seeking comment.
Citing ongoing negotiations, Mayor Stephanie Rawlings-Blake declined to identify the company that could create up to 2,600 jobs at the site of the former General Motors plant on Broening Highway.
The developer, Duke Realty Corp., an Indiana-based commercial real estate company that works frequently with Amazon, did not return messages seeking comment. Permit requests submitted to the city by Duke describe the planned warehouse as a distribution center with 50-foot ceilings and nearly 2,000 parking spots.
Amazon is the company that has been building the most facilities of that size in the United States in recent years, said Steve Banker, a consultant with Supply Chain Management near Boston.
"They have been on an aggressive building schedule," Banker said.
In late July, Amazon announced plans to hire 5,000 employees for full-time jobs at distribution facilities across the country and 2,000 for its customer service network. The company has opened eight distribution centers in the past year.
The Seattle-based online giant employs more than 20,000 workers at its nearly 50 U.S. distribution centers. The company has two warehouses in Delaware, six in Pennsylvania and three in Virginia, according to analysis by MWPVL International, which specializes in logistics and distribution. Amazon is projected to hit $100 billion in sales by 2015.
Amazon is building like-sized warehouses across the country to achieve same-day delivery, said Marc Wulfraat, a Montreal-based consultant and president of MWPVL International.
Locating in urban centers is key to that strategy, Wulfraat said. The Baltimore site is ideal for distribution because of its proximity to Interstate 95 and the port, he said.
"When you're setting up a distribution center, you need two things: One is cheap soil and the other is cheap labor," Wulfraat said. "Anything close to that I-95 stretch would be a hot territory. It would make perfect sense for them to be positioning themselves there."
Such a facility could easily deliver products to both the Baltimore and Washington metro areas, he said.
Same-day delivery will not only be a boon for customers but is critical to the planned expansion of the retail giant's online grocery store, AmazonFresh. AmazonFresh launched in Seattle about five years ago and is expanding to Los Angeles, San Francisco and New York City. It plans to add 20 more domestic and international markets next year, according to a Reuters report in June.
Based on the locations of its current distribution facilities, Wulfraat estimated Amazon can reach about 15 percent of the United States with same-day delivery. After conceding its battle to avoid collecting sales taxes in states where its online orders are processed, Wulfraat said quicker delivery is the next strategy for serving and retaining customers.
"With that competitive advantage going away, they have to jump into the war room," he said.
Expanding into the grocery business will help Amazon achieve its same-day delivery goals, Wulfraat said. By stocking delivery trucks with more items, bolstered by the frequency of having to purchase groceries, the cost to deliver each parcel drops, he said.
"It's a Trojan horse that allows them to get more deliveries on the truck," Wulfraat said. "It's all about reducing the expenses."
Amazon has been targeting ZIP codes where individuals have high disposable incomes, which makes the Washington market a likely candidate for an Amazon expansion, he said.
Wulfraat said he has no direct knowledge about plans for the Baltimore site, but the old GM property fits Amazon's typical space requirements. Sites the company selects for its warehouses are typically between 80 and 120 acres.
At Duke Realty's Chesapeake Commerce Center, 122 acres are available for development. Duke bought the 184-acre site in 2006, about a year after GM closed the 71-year-old assembly plant.
Four companies now operate on the old GM site, including MTC Logistics, a refrigerated warehouse company.
Rawlings-Blake said the property is poised for redevelopment thanks to environmental cleanup projects, private investment, public infrastructure improvements, and city and state efforts to expand the port.
"The former GM site represents a great opportunity for development and jobs in Baltimore City," the mayor said in a statement. "We are working diligently with Duke Realty to secure a tenant."
She declined further comment.
Jim Richardson, director of the Office of Economic Development for Harford County, said Amazon isn't the only company looking to the region for expansion, but it's a likely candidate. A new 675,000-square-foot distribution center was recently announced in Harford for Kenco, a distributor for Electrolux and other products.
Richardson said given Amazon's past interest in the region — and a recent project about 30 miles southwest of Wilmington, Del. — choosing Baltimore as part of an urban expansion effort is probable.
"Amazon does set the bar for e-commerce, there is no question about it," Richardson said. "Every distribution company is watching what Amazon does."