Amazon, which doubled the size of its logistics network at warp speed during the pandemic to well over 400M SF, now is proving that it can backpedal nearly as fast as it grew.
Since disclosing earlier this year that it overestimated the growth rate for e-commerce, resulting in too many warehouses and warehouse workers—and the first quarterly losses for the e-commerce titan since 2015—Amazon has been busy culling its industrial footprint.
The e-retail giant has used every space-reduction method in its toolbox, including shuttering warehouses, subleasing a chunk of its estimated 370M SF of leased industrial space, canceling new fulfillment center projects that haven’t broken ground and by delaying the opening of newly built warehouses for up to two years.
The scope of this effort has been nothing less than Amazonian: a new report from MWPVL International, which tracks logistics facilities, reports that Amazon has closed or killed plans to open 42 facilities totaling about 25M SF and delayed the opening of an additional 21 facilities totaling 28M SF.
The latest Amazon warehouses to get sliced are in the Baltimore area, where the company informed local officials last week that its last-mile delivery stations in Hanover and Essex, which employ more than 300 workers, would close next month.
According to MWPVL, Amazon’s cutbacks are not finished. “There remains some serious cutting [for them] to do before year-end, in North American and the rest of the world,” Mark Wulfraat, MWPVL’s president, told Bloomberg.
However, while Amazon continues to inflict economic pain on communities across the US with its warehouse closures and delayed openings, MWPVL’s report said the e-commerce behemoth is picking its spots by opening warehouse space in a few select locations where it believes traffic will support a full operation.
An Amazon spokesperson told Bloomberg that the e-retailer is making its industrial space adjustments “based on needs across the network.”
Amazon reported nearly $4B in losses in Q1 2022. When it decided to change course and reduce its industrial footprint, which at the beginning of the year encompassed an estimated 1,200 facilities, the company was in the midst of building up to 10 multi-story mega-warehouses at locations across the company.
Amazon said it would complete the buildings that are under construction, but it will delay their opening for up to two years. But numerous other development projects that have not yet broken ground—Amazon purchased an estimated 4,000 acres during the pandemic—abruptly have been canceled by the company.
According to Bloomberg, Amazon’s workforce—estimated at 1.52M—shrank by roughly 100,000 during the second quarter, the largest quarter-to-quarter labor contraction in the company’s history.