Amazon is abandoning dozens of existing and planned distribution facilities throughout the US, as it looks to scale back a delivery infrastructure which had exploded in size to serve the massive demand during the height of the pandemic.
Consulting firm MWPVL International Inc, which monitors Amazon’s real estate footprint, says it estimates the company has either shuttered or discontinued plans to open 42 warehouse facilities, totaling 25 million square feet of space. In addition the company has delayed the openings of an additional 21 locations with nearly 28 million square feet of space. The firm also noted Amazon has canceled some European projects, primarily in Spain.
Amazon warned Maryland officials this week that it will be closing two delivery facilities in Hanover and Essex which employ more than 300 people. This is a sharp contrast with previous years, as Amazon would normally be looking to scale up during this period to meet the rush of demand during the Christmas and holiday shopping season.
Marc Wulfraat, MWPVL’s founder and president noted, “There remains some serious cutting to do before year-end — in North America and the rest of the world. Having said this, they continue to go live with new facilities this year at an astonishing pace.”
Maria Boschetti, an Amazon spokesperson said in a statement the company is constantly making adjustments, “based upon needs across the network.” She added, “We weigh a variety of factors when deciding where to develop future sites to best serve customers. We have dozens of fulfillment centers, sortation centers, and delivery stations under construction and evolving around the world.”
Boschetti noted the Hanover and Essex closings were part of a shift of operations to more modern buildings, saying, “We regularly look at how we can improve the experience for our employees, partners, drivers and customers, and that includes upgrading our facilities. As part of that effort, we’ll be closing our delivery stations in Hanover and Essex and offering all employees the opportunity to transfer to several different delivery stations close by.”
Amazon had expanded aggressively to meet soaring demand during the height of the pandemic, as customers trapped at home shifted their shopping preferences toward ecommerce. For a time during that period, the company was opening a new warehouse every 24 hours. Now as demand recedes, Amazon is finding itself with an excess of delivery capacity it needs to unwind. Typically Amazon has engaged in downsizing simply by slowing hiring and leaving positions unfilled. Amazon shrank its workforce during the second quarter by roughly 100,000 workers that way, to 1.52 million employees. That was the biggest quarterly contraction in workforce in the company’s history.
Wulfraat said that most of the facility closings are actually delivery stations, which take already packaged items and hand them to delivery drivers for delivery. Among the facilities that were planned and are being canceled are several fulfillment centers, which are giant warehouses that hold millions of items and package them for shipping. According to MWPVL estimates, Amazon has over 1,200 logistics facilities across the US.
Some analysts are saying however that given the approaching holiday shopping season, Amazon’s downsizing may be more limited than many are indicating is likely.
