UPS said to be looking at 138-acre Northeast Philly site for distribution hub

United Parcel Service is among the companies considering the 138-acre former Budd Co. property on Red Lion Road in Northeast Philadelphia as a potential distribution hub, according to local UPS and industry sources.

“Philadelphia is one of the locations UPS is considering to further optimize our ground network across the Northeast,” said spokeswoman Kim Krebs at the company’s Atlanta headquarters Thursday. It may lease a property, leading to “potential facility development,” but Krebs would not comment on whether UPS wants a facility at the Red Lion Road location or other sites.

With 19,000 Pennsylvania drivers and other staff at its package-sorting and logistics centers, UPS is the fifth-largest for-profit employer in the state and is the largest that isn’t a retail store chain, according to state Labor Department data. The company also expects to hire 4,400 seasonal workers for its facilities near Philadelphia International Airport, West Chester, and Willow Grove for the pre-Christmas rush.

At the airport, 25 miles from Red Lion Road at the opposite end of the city, Philadelphia is already home to one of six main UPS airport hubs in the country. But the city has mostly missed out on the warehouse boom that has transformed U.S. retailing and created tens of thousands of jobs in former mining and factory regions elsewhere in Eastern Pennsylvania.

In the Lehigh Valley, UPS opened an 850,000-square-foot, “peak-season” shipping facility in Palmer Township and a regional hub in Allen Township last fall. Each employs more than 1,000, mostly Teamsters union members as full-time drivers and part-time loaders.

Neighbors in the far Northeast Philly neighborhood around the Red Lion Road site had expressed concern over traffic from previous schemes for the property. That included Teva Pharmaceutical’s abortive plan to build a drug logistics and distribution center on the same property. And more homes have been built there and additional higher-end residences have been planned since the former Budd railcar plant closed in 1987.

“I think it’s far-fetched” to redevelop the property for trucking, given stop-and-go traffic between the site and U.S. Route 1 and other highways, said Frank Roddy, owner of Roddy Inc., which leases industrial properties around the area and is currently marketing 281,000 square feet in Philadelphia Industrial Park, closer to I-95. But warehouse and industrial property is now “in short supply,” and in tight markets, “people do dumb things,” he added.

St. Louis-based Commercial Development Co. bought the property from Teva for $18 million last year and said it planned to build up to 1.6 million square feet of industrial space, larger than the tallest Center City office buildings, though it has not identified tenants. Commercial Development had no comment about progress on the site since its purchase last year, or about companies that may locate there.

For UPS or any other tenant, the developer would have to cap the building site and move ponds on the property, which has been subject to environmental remediation projects to clean up toxic materials left over from its railcar construction days. A previous owner had planned to work the surface water into a golf course.

Commercial Development is known in the Mid-Atlantic region for its work redeveloping the former Bethlehem Steel Sparrows Point mill complex outside downtown Baltimore as a warehouse center, and has similar plans for the former Claymont Steel site along the Pennsylvania-Delaware border off I-95, along with smaller pending projects at former industrial sites in Trenton and Reading.

Like its rivals, UPS has been using robotics to speed package movement. Automation would not necessarily displace jobs at older UPS locations, said company employees familiar with its newer facilities.

Rival FedEx recently announced it would no longer be working with online-retailing leader Amazon, leaving room for UPS to handle more of that company’s shipping and delivery.