Amazon cancels, delays dozens of warehouses as it looks to rightsize capacity - The Entrepreneurial Way with A.I.


Thursday, September 15, 2022

Amazon cancels, delays dozens of warehouses as it looks to rightsize capacity


Dive Brief:

  • Amazon's efforts to pull back the expansion of its fulfillment network have affected 66 active or planned U.S. facilities, according to MWPVL International, a consulting firm that tracks the e-commerce giant's logistics footprint.
  • The company's cancellations, closures, delays or pauses impact 24.6 million square feet of ground-level space for fulfillment centers, delivery stations and other types of buildings across 28 states, MWPVL President and founder Marc Wulfraat said in a Sept. 6 email.
  • Amazon still has 271 facilities with nearly 100 million total square feet in its pipeline, per MWPVL data. The company "is still opening up an astonishing amount of space this year — it’s just that they will open less space [than] originally planned," Wulfraat said.

Amazon warehouse closures, delays ripple throughout U.S.

Facilities that have been canceled, closed, delayed or placed on hold as of Sept. 6, per MWPVL International

Dive Insight:

MWPVL's data shows the extent of Amazon's efforts to scale back its warehouse presence as online sales decline from 2021's pandemic-fueled highs.

Excess capacity and less productive facilities in the past several months have resulted in billions of dollars in added costs for the company. In response, Amazon is slowing down its network expansion through 2023 "to better align with expected customer demand,” CFO Brian Olsavsky said on a July earnings call.

Amazon's actions don't target a particular facility type or geographic area. However, the majority of the moves are closures and plan cancellations — totaling 42 U.S. facilities — rather than delays. Four planned facilities in Spain and one facility in Germany have also been canceled.

Amazon is nixing these projects to reduce both capital expenditures and operational costs, Wulfraat said. Facilities that are closing are having their operations consolidated into another nearby warehouse or being put up for sublease.

Amazon spokesperson Maria Boschetti said in an email that the company weighs a variety of factors in deciding where to develop its future sites.

“We have dozens of fulfillment centers, sortation centers and delivery stations under construction and evolving around the world," Boschetti said. "It’s common for us to explore multiple locations simultaneously and adjust timetables based on needs across the network.”

Amazon is also delaying the opening of 24 facilities slated to open later this year, per MWPVL. Some have had their openings pushed back to as far as 2024. Wulfraat said the company "will pay the lease expense but avoid ramping up additional payroll."


Max Garland, Khareem Sudlow