Amazon has severed ties with several of its U.S. Delivery Service Partners (DSPs), and the move is resulting in the layoffs of more than 1,200 drivers. The small delivery firms are also pulling out of Amazon’s facilities at a record pace.
Amazon recently bragged about its partner program’s growth for deliveries, citing its 1,300 DSPs in five countries. The programs have been responsible for adding 85,000 job positions across the globe, with 1.8 billion deliveries worldwide.
But now, seven of its DSP firms have been notified that Amazon plans to sever contracts with them. The companies say that in addition to the 1,205 drivers that’ll be laid off, they’ve filed with state officials through WARN, or Worker Adjustment and Retraining Notification, to notify them of the layoffs. The WARN Act requires that employers offer advance notice within 60 days for any forthcoming mass layoffs or closures.
Amazon launched its DSP program in 2018, and its growth surpassed expectations. DSPs are typically distinguished by Amazon’s branded vans, which pick up packages from the company’s delivery stations and then drop them off at their destinations. The program offered the e-commerce giant a chance to ramp up its delivery capabilities and compete with other shipping partners like FedEx and UPS.
Georgia-based Courier Distribution Systems plans to lay off 273 of its Amazon delivery drivers in Wisconsin and Pennsylvania. Systemize Logistics, a delivery partner based out of Massachusetts, plans to close its New York and Connecticut locations and layoff 121 drivers and workers.
Closures and layoffs at Maryland-based TL Transportation, New Jersey-based Prime EFS, JST Transportation, and Sheffield Express will account for 731 of the lost jobs.
Amazon previously announced layoffs in February that resulted in 2,000-plus layoffs through contracts it ended with Express Parcel Service, Transportation Brokerage Specialists, Bear Down Logistics, and Delivery Force, among others. Amazon said the company evaluates its partners from time to time and makes adjustments accordingly.
An Amazon spokesperson said, “We have ended relationships with some partners, and Amazon is working closely with all impacted drivers to ensure they find opportunities to deliver Amazon packages with other local Delivery Service Partners with little to no disruption to pay.”
Amazon prefers higher-performing partners and is always on the hunt for new partners to replace the ones it severs ties with. However, it can be risky for new entrepreneurs to launch a delivery service with Amazon because it can put a stop to contracts so easily.
Many partners also say most of their revenue stems from Amazon deliveries, so when that business is lost, it’s a blow to the delivery firm.
IntelliQuick Delivery Inc., one of Amazon’s delivery contractors in Arizona, said Amazon ended its contract with the company abruptly.
“This comes as a complete shock to our company as a whole, and I can assure you the decision was not based off of performance,” executives told employees in a company communication.