Spain says goodbye to the dream of four new Amazon logistics plants (if it was ever on the table)

Amazon is stepping up its expansion plans in Spain. The e-commerce giant, which has made a considerable deployment in the country since the opening of its logistics base in San Fernando de Henaresin Madrid, ten years ago, decided to suspend the opening of four new centers which would add, in total, approximately 152,000 square meters (m2) and would be distributed in different parts of the country: Catalonia, the Basque Country and Andalusia.

The reason: if something it’s too much now Amazon is for space.

Four projects that go back to the drawer. The new advanced it The Economist there confirms it the vanguard: Amazon has decided to shut down at least four logistics centers it supposedly has on the table. More specifically, it designates an 80,000 square meter facility in Reus; another in Celrà, Girona (12,000 m2); and two others in Oiartzun (Victoria) and Seville which would cover an area of ​​approximately 30,000 m2 each. 152,000 square meters in total.

“Amazon plans new buildings years in advance, and it’s common for us to adjust a center’s launch schedule. Many factors can influence launch dates, such as better use of existing sites, increased hirings in said centers or delays in construction”, they limit themselves to pointing out from the company. At least for now, he has not confirmed, denied or clarified information on your projects.

The mayor of Reus, Carles Pellicer, has already put the land on which the American multinational planned to settle sale of other companies. how to slide The Economistall the suspended projects were still in a very embryonic phase or even unsigned.

when there is plenty of space. The decision comes in a well-defined context, after the rise of online commerce encouraged by the pandemic and Amazon’s efforts to deploy a now outdated logistics muscle. this peak Sales, it’s oversized. And expensive.

Morgan Stanley calculations They help to understand how well Amazon pulled out all the stops to absorb the surge in demand during the worst of the pandemic. According to his calculations, in just two years, the multinational has doubled the distribution network it had woven over the two and a half decades preceding 2020. Result: more warehouses which directly affected its profitability.

“We have too much space right now relative to our demand patterns,” recognized in the spring Chief Financial Officer Brian Olsavsky. Already at that time, he showed that he would stop new centers to avoid “overbuilding” and moderate leases.

A charge that is felt in your accounts. More space equals more expense. Amazon knows this and that’s why it decided to act on the matter. After the poor first quarter results, which showed some losses of 3,600 million euros — a fact largely due to its stake in Rivian, but also due to increased spending in its own network — has transcended the company’s plans to reduce its logistics muscle. At least in the United States.

On the table I would have – according to revealed Bloomberg in May– a 10 million square foot sublease plan in warehouses spread over points like New York, California or Atlanta. On the surface, they would be equivalent to about 5% of the space gained during the pandemic.

Downshift, but without applying the brake. It’s one thing to downshift and another, indeed, to pull the handbrake. The fact that the company is shelving its plans for Reus, Girona, Vitoria and Seville does not mean that Amazon is giving up, let alone all of its expansion in Spain. The company maintains its active plans for the centers of Figueres there So (Castellón) and not so long ago it was reinforced in the outskirts of Madrid, with services e facilities. “The next planned inauguration is the opening of our new FC in Onda on July 18,” they specify.

Its difficulties due to the excess of space are not, as the leaders of the multinational have shown, exclusive to Spain. They’re not even exclusive to Amazon. A general level the logistics boom in the country triggered fear of oversupply and the abundance of ships.

And the future? Good evidence of Amazon’s expectations is that even its US warehouse rental plans were drafted with clauses that limited them to one or two years. For some experts, the problem of excess capacity will resolve itself as sales increase and it could even be an advantage if the surplus is sold in a scenario of rising rents and falling vacancy rates in warehouses.

“It happens all the time. Building a capital-intensive network and scaling it to demand is always likely to have a kick-start effect. It’s a bit like a teenager learning to drive a car. Either you step on the accelerator, or you step on the brake. They back up hard and then go fast.” comments by Scott Ruffinfrom Pandion, to Business Intern.

Cover image | Adrian Sulyok (Unsplash)

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