Amazon “Suspends” Construction Of New Warehouses In Spain As Consumption Boom Falters

Amazon “Suspends” Construction Of New Warehouses In Spain As Consumption Boom Falters

Amazon has been determined to reduce the size of its massive fulfillment network in North America as consumers pull back on spending. Now the e-commerce giant has “suspended” construction work of new logistic centers in Spain, according to local news website El Confidencial

For some context, Amazon spent billions of dollars doubling its fulfillment network’s size in North America during the virus pandemic. MWPVL International Inc., which tracks Amazon’s real-estate deals, said the company canceled plans to open 42 US facilities totaling almost 25 million square feet this year. 

The reductions didn’t stop in North America. Amazon has also canceled European expansion projects, mainly in Spain, as slowing e-commerce sales growth means the company is undergoing belt-tightening measures.  

El Confidencial, citing unidentified company sources, said Amazon told its partners that construction of new warehouses in Spain would be suspended until 2024. 

Amazon is in “wait and see” as pandemic-driven online shopping boom has rapidly slowed as consumers return to brick-and-mortar stores. But what’s also concerning is energy hyperinflation has severely dented household spending on discretionary items. 

Amazon told Reuters they’re still “commitment to Spain” but see a period of uncertainty next year. Perhaps this is because European recession risks are flourishing over the next 12 months. 

Source: Bloomberg

Reducing warehouse operations in North America and Europe is a troubling sign of overcapacity issues and reflects souring consumer health. The question is if warehouse reductions in North America and the rest of the world are over. 

Tyler Durden
Tue, 09/20/2022 – 02:45

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