Amazon To Delay Opening Of Multiple Fulfillment Centers
Amazon is delaying the opening of multiple fulfillment centers as the company continues to slow its industrial growth.
The e-commerce giant has postponed fulfillment center openings in Iowa, Texas and Tennessee in the past two months, attributing the delays to slower-than-anticipated growth and supply chain issues, GlobeSt reported, citing multiple local media reports.
A five-story warehouse in Davenport, Iowa, that was scheduled to open in September has now been delayed until 2024, an Amazon spokesperson told a local television station. Another fulfillment center in Alcoa, Tennessee, had its opening delayed from last month to June 2023. A $200M fulfillment center in San Antonio's East Side neighborhood has also been delayed.
The company is reportedly telling locations that they can't open until there is enough product flowing through to operate at full capacity. It is also telling communities that it is still committed to opening the locations eventually but that it won't begin hiring employees in the near future.
Amazon has also reportedly canceled plans to build fulfillment centers in Churchill, Pennsylvania, and Austin, Texas.
In February, Amazon announced it would start slowing down its industrial real estate growth after almost doubling in size over the last two years as demand skyrocketed.
"During the pandemic, we were facing not only unprecedented demand but also extended lead times on new capacity," Chief Financial Officer Brian Olsavsky said during the first-quarter earnings call with analysts. "And we built towards the high end of a very volatile demand outlook."
In May, reports emerged that Amazon planned to sublease anywhere between 10M SF and 30M SF of industrial space in big markets, including Atlanta, New York, New Jersey and Southern California. That represents a fraction of its 370M SF footprint, but the move is likely to make waves in the industrial market.
In Q1, Amazon lost $3.8B compared to the $8.1B in net income gained during the same quarter last year. The company also had an additional $2B in expenses which Olsavsky said was the result of industrial overcapacity.