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Why Amazon is postponing the opening of three fulfillment centers

By Nithya Bose in Business News, posted June 13, 2022

Amazon delayed the opening of fulfillment centers in Iowa, Texas, and Tennessee in the last two months, citing the delays on slower-than-expected growth and supply chain concerns.

A five-floor warehouse in Davenport, Iowa, that was supposed to open in September, has been postponed until 2024, whereas another one in Alcoa, Tennessee, saw its start date pushed back to June 2023 from last month.

A $200 million fulfillment facility on San Antonio's East Side has also been delayed.

The company supposedly told locations that they cannot open until there are enough goods moving through to operate at full capacity.

It is also informing communities that it is committed to opening the stores in the future but will not begin recruiting staff in the near future.

Amazon is also said to have scrapped plans to develop distribution centers in Churchill, Pennsylvania, and Austin, Texas.

Amazon announced in February that it will begin halting its industrial real estate development after almost doubling in size over the previous two years as demand surged.

Chief Financial Officer Brian Olsavsky said: "During the pandemic, we were facing not only unprecedented demand but also extended lead times on new capacity. And we built towards the high end of a very volatile demand outlook."

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In May, it was reported that Amazon planned to sublease anywhere from 10 million to 30 million square feet of industrial space in major regions such as Atlanta, New York, New Jersey, and Southern California.

This is a small portion of its 370 million square feet footprint, but the move is expected to cause ripples in the industrial market.

Amazon lost $3.8 billion in the first quarter, compared to $8.1 billion in net profits in the same time the previous year.

The company also incurred an additional $2 billion in expenditures, which Olsavsky attributed to industrial overcapacity.

Source: Bisnow

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