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Amazon reduces contributions to Spanish logistics by 25% to 435 million

Date: October 1, 2023 Time: 13:46:11

The year 2021 was a record for electronic commerce due to the ‘boom’ after the outbreak of the pandemic. The large companies in the sector stepped up the accelerator to respond to demand, investing in logistics and personnel centers. Then came the adjustment. Amazon reduced cash injections from Luxembourg to Spanish logistics significantly, after stopping contributions to the local subsidiary dedicated to managing the ‘last mile’. In total, it disbursed 435 million euros. This occurs in the year where hiring in stores was significantly reduced and the openings of several important centers in this market were postponed.

The American giant raised the investment to 600 million euros in 2021 between the two main companies with which it operates the management of dozens of warehouses and deliveries through its own brand with subcontracted companies. Specifically, it injected 400 million euros into Amazon Spain Fulfillment, the division of the centers, which meant multiplying by more than three what had been accumulated up to that date. In addition, it contributed a total of 200 million to Amazon Road Transport in the month of October, which meant more than doubling the previous figure.

In the year 2022, the landscape changed significantly for the group. As reflected in the annual accounts presented by the Luxembourg parent Amazon EU Sarl consulted by La Información, the warehouse subsidiary has received 435 million euros, which places the total contributions above 1,100 million. This represents a slight increase from the previous year. The key is that nothing has been contributed to the ‘last mile’. This cut also extends to the main European divisions: the injections that were made to Polish and Italian logistics have also slowed down.

These disbursements made from the parent do not appear as capital increases for use but as ‘Other Partner Contributions’ within own funds. They serve to carry out the investments in the assets and support the debts and, in a residual way, the coverage of the ‘stock options’ plans for the workforce. The 2022 accounts of the different Spanish logistics subsidiaries are not yet available. In 2021, the warehouse subsidiary doubled non-current assets to 1,340 million euros, with strong growth in warehouse land and construction and in “technical facilities”.

This brake on investment occurs in 2022, which has been marked by a certain ‘hangover’ in the e-commerce market after two years of ‘boom’ due to the pandemic. The company’s financial manager, Brian Olasvsky, already warned it just a year ago, in April of that year, at the analysts’ conference for the presentation of results: “Now we have too much space [de almacenes] regarding demand trends.

In 2022, the giant slowed down and, in some cases, paralyzed a good part of the relevant logistics centers in the Spanish market

From there they promised investors a cost adjustment and a reduction of that logistics plant. Last February, CEO Andy Jassy was clear: “We doubled our logistics footprint in a couple of years and at the same time built a last-mile network the size of UPS, so there’s a lot to figure out about how to optimize We are pleased with the progress in the fourth quarter, but this work will extend through 2023.”

The brake in Spain

In Spain, as in other markets, the brake was stepped on. The giant has slowed down or, directly, paralyzed a good part of the new centers planned in the Spanish market. It is estimated that more than 360 projects have gone from 2021 -between new construction and renovation- throughout Europe to less than a tenth of them for this 2023. In Spain, only one new one of immediate deliveries to ‘Prime’ customers in Madrid, according to what internal sources told this newspaper.

The large center of 200,000 square meters in Badajoz has been completed -with an opening license- but the company has not carried out the hiring of personnel, according to what the local press pointed out a few weeks ago. The opening of the Siero in Asturias, with a surface area of ​​200,000 square meters, was scheduled for 2022 and there is still no date for this 2023. Regarding the hiring of personnel, the company hardly has any vacancies for warehouse clerks in Figueras and Zaragoza.

employment records

For now there have been no major employment regulation files (ERE) in the logistics workforce, despite the fear among the workforce. What it has carried out is closures of some warehouses and more or less forced relocations of equipment. This is, for example, what has happened in Martorelles (Barcelona). The company raised its closure and the transfer of employees to El Prat de Llobregat, Zaragoza or Figueres. An agreement was reached with the works council, both regarding the dismissal conditions and the relocations.

Where a series of layoffs has been announced globally is in the corporate area, until now ‘untouchable’. In total, of the more than 600,000 that are part of this structure, regardless of logistics, around 27,000 will leave between the end of 2022 and this year, as has been announced, in areas such as Amazon Web Services (cloud), advertising, Twitch or mobile devices. . No ERE or collective dismissal in Spain has yet been made public, as other giants such as Twitter or Facebook have done.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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