The e-commerce giant plans to strategically move forward with enormous fulfillment center construction that will open the door for more warehouse workers, last-mile drivers, and CDL holders in select areas. Notions about the demise of Amazon’s increasing dominance appear to have been exaggerated and premature.
Amazon tapped the breaks on a wide range of warehouse plans in late spring after reportedly suffering a $3.8 billion first-quarter loss, its only setback since 2015. Much of the loss was attributed to excess capacity that hovered around $2 billion. After reviewing its — perhaps — overly aggressive logistics expansion and underused storage space, Amazon is again looking to the future.
A revised logistical strategy appears to have Amazon securing millions of square feet in warehouse space in densely populated areas. The company recently secured local approval to erect a five-story distribution center in Niagara, New York, with 3.1 million square feet of floor space estimated at $550 million.
“These facilities, because the capital investment is so high, are long-term bets,” Gregg Healy, executive vice president at real-estate services provider Savills PLC, reportedly said. “Considering they had kind of an all-in strategy just to get coverage before in these markets, this new iteration for strategy indicates that they are refining it, and certain core markets, they want to make sure they have the right footprint.”
Amazon green-lit facilities in Southern California and Colorado that are expected to be even larger than New York. The Ontario, California, mega-warehouse adds 4.1 million square feet, and the Loveland, Colorado, location kicks in 3.8 million square feet. All three outpace the company’s current largest at 3.6 million square feet, located in Joliet, Tennessee.
“This is not a year where they’re slamming on the brakes by any stretch of the imagination,” Marc Wulfraat, founder and president of MWPVL International, reportedly said. “It’s nothing to sneeze at. These guys are still on an incredible build-out.”
Amazon took full advantage of consumers pivoting to e-commerce during the height of the pandemic. The company added more than 200 million worth of warehouse square feet, bought up trucks, delivery vans, and hired thousands of people for fulfillment centers and freight hauling operations. It was when people returned to in-store shopping that Amazon had to rethink its logistics footprint.
While it’s true that Amazon canceled certain projects and leaves others in limbo, the expansion appears to be moving forward at a more pre-pandemic pace. Amazon reportedly has upwards of 250 facilities in the 2022 pipeline that include smaller spaces in the 100,000-square-foot range.
The growth and opportunities for truckers, warehouse personnel, and last-mile drivers continue to prove remarkable given the country struggles with 40-year-high inflation and fuel costs. Large warehouse facilities typically employ a mix of automation with more than 1,000 warehouse and administrative staff members. The need for more semi-truck drivers will only increase.
Sources:
https://www.freightwaves.com/news/amazon-is-doubling-down-on-its-warehouse-strategy
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