Amazon in logistical overcapacity
Article written by Sophie Baqué, on June 6, 2022
According to Bloomberg, Amazon now has too much storage capacity in the U.S., as e-commerce returns to normal after two years of euphoria.
After two sluggish quarters (Q1 22 : online product sales down 3% / net loss of US$3.8 billion), Amazon is looking to sublet between 1 million (at least) and 3 million sq.m of logistics space in the U.S.A. It also wants to break many leases with property owners, including Prologis. KBC Advisors has been commissioned to evaluate the logistic sites and determine which warehouses will be sublet or returned to their owners. The overcapacity is in New York, New Jersey, California and Atlanta. Regarding subleasing, Amazon would opt for short contracts, between 1 and 2 years minimum.
As announced in the Q1 2022 results, Amazon has capacity that exceeds demand, but expects operations to stabilise as the year progresses. Its priority is to adapt capacity to a more normalised demand model. “The company is now focused on controlling costs,” said C.F.O. Brian Olsavsky.