Amazon.com, determined to downsize its sprawling delivery operation amid slowing sales growthhas abandoned dozens of existing and planned installations in the United States, according to a consulting firm.
MWPVL International, which tracks Amazon’s real estate footprint, estimates that the company closed or scrapped plans to open 42 facilities with a total of nearly 25 million square feet of usable space. The company has delayed the opening of an additional 21 locations, totaling nearly 28 million square feet, according to MWPVL.
The e-commerce giant too canceled a handful of European projects, mainly in Spainthe firm said.
Just this week, Amazon warned Maryland officials that plans to close two delivery stations next month in Hanover and Essex, near Baltimore, that employ more than 300 people. The moves are in striking contrast to previous years, when the world’s largest e-commerce company typically entered the fall rushing to open new facilities and hire thousands of workers to prepare for the holiday shopping season. Amazon continues to open facilities where it requires more space to meet customer demand.
“There are still some serious cuts to be made before the end of the year, in North America and the rest of the world,” said Marc Wulfraat, founder and president of MWPVL. “Having said that, they continue to bring new facilities online this year at an amazing rate.”
Amazon says Maryland closures they are part of an initiative to move the work to more modern buildings. “We regularly discuss how we can improve the experience for our employees, partners, drivers and customers, and that includes improving our facilities,” a spokesperson said in an emailed statement. “As part of that effort, we will close our delivery stations in Hanover and Essex and we will offer all employees the opportunity to travel to several nearby delivery stations.”
Amazon did not immediately comment on the MWPVL estimates.
Chief Executive Officer Andy Jassy has vowed to undo part of a pandemic-era expansion that saddled Amazon with excess warehouse space and too many employees. The company has typically weaned its ranks of hourly workers by leaving vacant positions open, slowing hiring and tightening disciplinary or productivity standards. But warehouse closings are also part of the mix, with workers bracing for more.
During the second trimester, Amazon’s workforce shrunk by roughly 100,000 jobs to 1.52 millionthe largest quarter-over-quarter contraction in company history.
The Seattle company has also been looking sublet at least 10 million square feet of storage spacereported Bloomberg in May.
Effects on the relationship with workers
When homebound shoppers rushed online during the pandemic, Amazon responded by doubling the size of its logistics network in a two-year period. a rapid expansion that surpassed that of rivals and partners such as Walmart Inc., United Parcel Service and FedEx. For a while, Amazon opened a new warehouse somewhere in the US roughly every 24 hours.
Jassy le dijo a Bloomberg in June that the company had decided in early 2021 to move toward the higher end of its forecasts for buyer demand, making the mistake of having too much storage space instead of too little.
Wulfraat said most of the closures announced this year are drop-off stations, smaller buildings that deliver pre-packaged items to drivers. The facilities that have been canceled include several planned fulfillment centers, giant warehouses containing millions of items. MWPVL estimates that Amazon operates more than 1,200 logistics facilities, large and small, in the US.
More belt-tightening might complicate Amazon’s already strained relations with organized labor. At the beginning of this year, a new union started by a laid-off Amazon worker has won a historic victory at a company warehouse in Staten Island, New York. A federal labor official rejected on Thursday Amazon’s offer to nullify the result.
Last month, workers at an Amazon facility near Albany, New York, filed a petition to hold union elections there.
It’s hard to gauge how much excess capacity Amazon needs to work with, and some analysts believe the extra space will come in handy during the holiday season.
