Amazon closes, abandons plans for dozens of US warehouses

(Bloomberg) — Inc., determined to downsize its sprawling delivery operation amid slowing sales growth, has abandoned dozens of existing and planned U.S. facilities, according to a closely watched consulting firm.

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MWPVL International Inc., which tracks Amazon’s real estate footprint, estimates that the company has either closed or ended plans to open 42 facilities totaling 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 has also canceled a handful of European projects, mostly in Spain, the firm said.

Just this week, Amazon warned officials in Maryland that it plans to close two delivery stations next month in Hanover and Essex, near Baltimore, that employ more than 300 people. The moves are a stark 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 needs more space to meet customer demand.

“There are some serious layoffs ahead before the end of the year – in North America and the rest of the world,” said Mark Wolfraat, founder and president of MWPVL. “With that in mind, they continue to work on new facilities this year at an astonishing pace.”

Amazon says the Maryland closings are part of an initiative to shift work to more modern buildings. “We regularly look at how we can improve the experience for our employees, partners, drivers and customers, and that includes upgrading our facilities,” a spokesperson said in an emailed statement. “As part of this effort, we will be closing our Hanover and Essex delivery stations and offering all employees the option to transfer to several different delivery stations nearby.” Amazon had no immediate comment on MWPVL’s valuations.

Chief Executive Andy Jassy has vowed to end some of the pandemic-era expansion that has saddled Amazon with excess warehouse space and too many employees. The company typically cuts its ranks of hourly employees by leaving positions unfilled, delaying hiring, and tightening disciplinary or performance standards. But warehouse closings are also part of the mix, and workers are bracing for more. In the second quarter, Amazon’s workforce shrank by roughly 100,000 jobs to 1.52 million, the largest quarterly decline in the company’s history.

The Seattle company is also trying to lease at least 10 million square feet of warehouse space, Bloomberg reported in May.

As homebound shoppers flock online during the pandemic, Amazon has responded by doubling the size of its logistics network over a two-year period, a rapid build that outpaces that of rivals and partners such as Walmart Inc., United Parcel Service Inc. . and FedEx Corp. For a while, Amazon opened a new warehouse somewhere in the US roughly every 24 hours. Jassi told Bloomberg in June that the company decided in early 2021 to build toward the high end of its shopper demand forecast, erring on the side of too much inventory, not too little.

Wulfraat said most of the closings announced this year are delivery stations, smaller buildings that hand off prepackaged 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 could complicate Amazon’s already strained relationship with organized labor. Earlier this year, a new union formed by a fired Amazon worker won a historic victory at the company’s warehouse in Staten Island, New York. A federal labor official on Thursday rejected Amazon’s bid to overturn the result. Last month, workers at an Amazon facility near Albany, New York, petitioned to hold union elections there.

How much overcapacity Amazon has to overcome is difficult to gauge, and some analysts believe the extra space will come in handy during the Christmas holidays.

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