More than 1,200 Amazon delivery executives have been fired in recent months after the company cut contracts with several small delivery companies across the country.
Amazon informed at least seven companies that are part of its delivery partner, as DSP, program that it had its contracts terminated. The companies announced that they will lay off about 1,205 drivers and withdraw from Amazon facilities in employee adjustment and re-notification, like WARN, submissions submitted this month and in recent months to government officials. The WARN Act requires employers to provide prior notice, generally within 60 days, of mass redundancies and plant closures.
Amazon’s DSP program, launched in 2018, has allowed the company to scale up its last-mile delivery capabilities and compete with shipping partners such as UPS and FedEx. DSPs are contracted suppliers, mostly distinguished by Amazon-branded trucks, who are responsible for picking up packages from Amazon delivery stations and throwing them at the doors.
Many of the companies affected by Amazon’s abolition of DSPs have announced redundancies across several states and local locations, although the Amazon delivery stations they operate do not remain open. Courier Distribution Systems, a Georgia-based delivery partner, employs 273 drivers in Pennsylvania and Wisconsin. Massachusettsize-based Systemize Logistics closes locations in Connecticut and New York, eliminating 121 jobs.
Elsewhere, Maryland-based TL Transportation is cutting 80 jobs in Pennsylvania while a New York facility is being shut down, resulting in 76 layoffs. Prime EFS, based in New Jersey, was forced to lay off 388 workers in the state and in Pennsylvania. JST Transportation laid off 51 employees in Massachusetts and Deliverol Global cut 41 jobs in Pennsylvania. Sheffield Express laid off 95 employees in Connecticut and said it would close its facility there.
A Amazon spokesman told CNBC in a statement that the company regularly evaluates its carrier partnerships. In another recent round of layoffs, beginning in February, the company terminated contracts with Transportation Brokerage Specialists, Bear Down Logistics, Express Parcel Service and Delivery Force, among several other companies, resulting in at least 2,000 layoffs.
“We have ended relationships with some partners and Amazon is working closely with all affected drivers to ensure that they find opportunities to deliver Amazon packages with other local Delivery Service Partners with little to no payment restrictions,” the spokesman added. .
Courier Distribution Systems, Systemize Logistics, TL Shipping, Prime EFS, JST Shipping, Deliverol Global and Sheffield Express did not respond to requests for comment.
While Amazon continues to deliver poor performance from delivery partners, the program has grown rapidly since it launched two years ago. There are now more than 1,300 DSPs across five countries that have added 85,000 jobs and delivered more than 1.8 billion packages worldwide, Amazon said in a blog post earlier this month. That even with the recent cuts, Amazon has added many new partners to take over.
The DSP program is a happy prospect for aspiring business owners. Amazon promises start-up costs as low as $ 10,000 to launch a delivery fleet and the potential to earn $ 300,000 a year once a fleet spans 20 to 40 vans.
But the ease with which Amazon can cut contracts with DSPs shows that the program poses no risk to the entrepreneurs who choose to launch their own delivery service.
In some cases, the loss of a contract with Amazon could be a blow to a DSP company. Transportation and Logistics Systems, the parent company of Prime EFS, said that 74% of its revenue for the year ended December 31, 2019, was due to Prime EFS’s DSP contract with Amazon.
For others, Amazon’s decision to terminate a contract may seem abrupt, including to IntelliQuick Delivery Inc., an Arizona-based supplier. IQDI informed employees on July 1 that it had lost its contract with Amazon.
“This comes as a complete shock to our company as a whole and I can assure you that the decision was not based on performance,” the company said in a statement to employees, which was received by CNBC. “We will continue to run as normal to provide service to Amazon through July 18, 2020.”
It is unclear how many IQDI employees lost their jobs as a result of Amazon terminating their contract. Representatives of IQDI did not respond to multiple requests for comment.
Phillip Cullinane, an IQDI administrator in Salt Lake City, said “everyone ate [the Utah location] was fired. “The Salt Lake City location recently doubled its workforce to about 80 employees to meet the flow in online shopping led by the pandemic,” Cullinane said.
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