Amazon ends relationships with a number of small delivery contractors across the United States. This forces these companies to lay off hundreds of workers. Logistics partner Bear Down Logistics cuts the jobs of 400 employees. At the same time, Delivery Force from Seattle lays off 272 workers.
According to Amazon, the logistic service providers that see their relationships with the marketplace giant end do not meet the safety or performance requirements Amazon has set. The marketplace aims to deliver as much of its goods by itself. It does, however, work with a number of independent delivery companies that help. This way, Amazon aims to get packages delivered to customers in time. Aside from that, the marketplace works with partners such as UPS and USPS.
To collaborate with these local service providers, Amazon launched the Delivery Service Partners (DSP) program in 2018. The selected partners would operate independently but would get training and support from Amazon. They would also be able to take advantage of deals negotiated by Amazon for insurance, mobile devices, data plans, uniforms and more.
High delivery costs
In a statement sent to GeekWire, Amazon comments: “Prior to launching the DSP program to empower entrepreneurs to build their business with Amazon, we contracted with a number of small logistics companies.” The service providers that see their relationship with the marketplace giant come to an end are part of this group. “Some of these companies have not met our bar for safety, performance or working conditions, and we are 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.”
One of the critiques of the DSP program is that Amazon tries to avoid high costs it pays to postal service providers such as UPS and USPS. Amazon’s shipping costs have ballooned in recent years, in part due to its one-day delivery initiative that launched April 2019. In 2019 as a whole, Amazon spent $37.9 billion on shipping, an increase of 37% from 2018. The company also heavily invests in its own fleet.