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09/07/2022

Report: Amazon cuts back on warehouses

Dan Berthiaume
Senior Editor, Technology
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Amazon is reportedly shutting down some supply chain facilities.

Amazon is reportedly downscaling its physical delivery infrastructure.

According to Bloomberg, consulting firm MWPVL International Inc. estimates that Amazon has either closed down or decided not to open 42 U.S. warehouses with a combined space of close to 25 million square feet.

MWPVL also says that Amazon is delaying the opening of another 21 U.S. supply chain facilities representing almost 28 million square feet of combined space, and has canceled the opening of some warehouses in Europe, mostly concentrated in Spain. Amazon recently informed Maryland state officials it will close two delivery stations that employ 300 workers in the Baltimore area in October 2022, Bloomberg reports.

“We weigh a variety of factors when deciding where to develop future sites to best serve customers,” an Amazon spokesperson said in a statement emailed to Bloomberg. “We have dozens of fulfillment centers, sortation centers and delivery stations under construction and evolving around the world.

“We regularly look at how we can improve the experience for our employees, partners, drivers and customers, and that includes upgrading our facilities,” Amazon said in the statement. “As part of that effort, we’ll be closing our delivery stations in Hanover and Essex (Maryland) and offering all employees the opportunity to transfer to several different delivery stations close by.”  

Amazon is making this decision following a mixed second quarter ended June 30 that included a loss of $2 billion, or $0.20 per share, compared with net income of $7.8 billion, or $0.76 per diluted share, in the year-ago period. During the quarter, Amazon reduced headcount by about 100,000 employees, and CEO Andy Jassy said the company would scale back operations as the sales boom it experienced during the COVID-19 pandemic cools.

Interestingly, even as Amazon appears to be scaling back its supply chain infrastructure plans, the company is launching Amazon Warehousing & Distribution (AWD), a service designed to provide low-cost, long-term storage that gives sellers the option to store their inventory in Amazon distribution centers and then seamlessly replenish to Amazon fulfillment centers. The e-tail giant is supporting the service with new, purpose-built facilities for bulk storage and automated distribution.