Amazon.com Inc. is contemplating a substantial $15 billion investment to establish approximately 80 new logistics facilities across urban and rural areas in the United States. This initiative marks a significant shift from the company’s post-pandemic construction slowdown and aims to enhance its delivery infrastructure nationwide.
The proposed expansion includes a mix of delivery hubs and large fulfillment centers equipped with advanced robotics technology. Amazon has invited potential capital partners to submit proposals for these facilities and is open to leasing them for terms ranging from 15 to 25 years. Some sites may also receive direct funding from the company. Currently, Amazon operates over 600 logistics facilities in the U.S.
In a related development, Amazon has canceled orders for various products manufactured in China and other Asian countries. This decision follows the U.S. administration’s announcement on April 2 of new tariffs, leading to abrupt cancellations of items such as beach chairs, scooters, and air conditioners. The timing of these cancellations has raised concerns among vendors, who suspect they are a response to the newly imposed tariffs. In retaliation, China increased tariffs on U.S. imports to 84%, further escalating global trade tensions.
Amazon’s focus on expanding its logistics network aligns with its broader strategy to enhance delivery speeds and reduce shipping costs. The company has been restructuring its U.S. distribution network by decentralizing operations into nine self-sufficient regions. This approach aims to position goods closer to consumers, facilitating faster deliveries. In the latter part of 2023, Amazon reported a more than 65% increase in orders delivered on the same or next day compared to the previous year.
To support this regionalization effort, Amazon has been acquiring industrial properties and investing in both large inbound receiving centers and smaller delivery stations in rural areas. These facilities are designed to streamline order processing and minimize final-mile transportation costs. The company’s expansion is also seen as a strategic move to compete with rivals such as Walmart, which leverages its extensive network of over 4,600 stores to fulfill online orders.
In addition to physical infrastructure investments, Amazon is heavily investing in robotics and automation within its warehouses. The company plans to invest $25 billion in a new generation of robotics-led warehouses, anticipating significant efficiencies and faster delivery times. For instance, the fulfillment center in Shreveport, Louisiana, has demonstrated a 25% cost reduction due to automation. These advancements are expected to generate annual savings of up to $10 billion by the end of the decade.
