Amazon is ending relationships with a number of small delivery contractors across the U.S., forcing companies to lay off hundreds of workers.
Bloomberg first reported Friday morning that Bear Down Logistics, an Amazon delivery partner, was shutting down operations in five states and cutting 400 jobs.
Then on Friday afternoon, a WARN notice filed with the state of Washington showed that Seattle-based Delivery Force, a “last mile supplier for Amazon,” was laying off 272 workers.
In an emailed statement sent to GeekWire, Amazon said these companies did not meet safety or performance requirements.
Amazon works with a number of independent delivery companies that help get packages to customers’ doors, in addition to partners such as UPS and USPS.
In 2018, Amazon launched a new initiative called Delivery Service Partners to encourage more entrepreneurs to start delivery businesses. DSPs, as they’re known, operate independently but get support and training from Amazon, and can take advantage of deals negotiated by Amazon for insurance, mobile devices, data plans, uniforms and vehicle leases for Prime-branded vans. Those vans can only be used to deliver Amazon packages.
“Prior to launching the DSP program to empower entrepreneurs to build their businesses with Amazon, we contracted with a number of small logistics companies,” Amazon said in its statement.
“Some of these companies have not met our bar for safety, performance or working conditions, and we’re in the process of exiting them from the program. We are planning for there to be zero or very little net job loss in these communities because nearly all impacted employees of these companies will have an opportunity to move into other delivery driver roles with Amazon partners.”
We’ve contacted Delivery Force and will update this story when we hear back.
Amazon came under fire last year after a reports revealed a delivery network rife with violations of labor laws that resulted in accidents on numerous occasions.
Amazon began testing contract couriers in 2014 and launched its Flex program the following year. Flex drivers — also classified as independent contractors — deliver packages for Amazon using their own vehicles.
The Seattle tech giant is adding delivery capacity as it ships more packages and its Prime membership program tops 150 million subscribers.
Amazon is also growing its own fleet of branded planes and trucks that help with delivery. The company is now delivering 50 percent of packages itself, according to recent Morgan Stanley estimates reported by CNBC. FedEx announced in August that it was ending its ground delivery contract with Amazon.
Amazon’s shipping costs have ballooned in recent years, in part due to its 1-day delivery initiative that launched this past April. In 2019 as a whole, Amazon spent $37.9 billion on shipping, an increase of 37 percent from 2018.