Amazon Axes Delivery Partners in the United States; Hundreds of jobs deleted

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(Bloomberg) - Amazon.com Inc. is breaking ties with small delivery companies across the country - putting at least 1,300 unemployed drivers - in an effort to eliminate partners who don't meet its standards.Bear Down Logistics, an Illinois company that has grown rapidly in the past two years, is shutting down operations in five states and dropping approximately 400 drivers. Delivery Force, an Amazon delivery partner in Washington State, is killing 272 drivers in Seattle and other cities. RCX Logistics, a Kansas-based delivery partner of Amazon with operations in Texas, Alabama and Florida, will cut jobs for more than 600 employees after losing its contract with Amazon. Logistics companies across the country are informing state officials of the plant closings and job cuts, a sign that Amazon is killing the herd.

The action highlights the challenges of outsourcing deliveries to new, untested companies instead of traditional partners such as United Parcel Service Inc. and FedEx Corp. It also serves as a warning to Amazon delivery partners that the company is a demanding customer ready to shut them down. .

Bear Down Logistics has informed Ohio, Virginia, Minnesota and Illinois that it will close its facilities in those states in April, resulting in the loss of nearly 280 jobs. Another Bear Down facility near Grand Rapids, Michigan, will also close in April, according to documents reviewed by Bloomberg. About 120 drivers work at the Michigan facility, said a person familiar with the matter who spoke on condition of anonymity due to the company's policies for dealing with the media. The company also has Amazon delivery operations in Wisconsin, whose status was not immediately clear.

"We have a responsibility to our customers and the communities in which we operate to ensure that these partners meet our high standards for safety and working conditions," said an Amazon spokesperson in an e- email. "Sometimes we have to end a relationship with a partner and when that happens, we are committed to helping affected employees find opportunities with other delivery service partners or to learn more about the thousands of roles available at Amazon delivery stations and distribution centers. ”

Bear Down Logistics, Delivery Force and RCX Logistics did not immediately respond to requests for comment.

Amazon launched a program in 2018 to encourage aspiring entrepreneurs to hire vans, hire drivers and start their own business by delivering packages to customers. Over 800 of these companies were established across the country with 75,000 drivers, which has helped Amazon increase its delivery capacity. Amazon also has greater negotiating leverage on each small operator than with larger delivery partners like UPS, FedEx, and the United States Postal Service.

Drivers working for Amazon delivery partners typically earn less than their counterparts working at larger delivery companies like UPS, which helps Amazon reduce costs. A driver working for Bear Down Logistics in Michigan said he earned about $ 15 an hour delivering Amazon packages, while UPS paid seasonal drivers doing the same job in this area about $ 20 an hour. hour.

A big challenge for Amazon is to balance security with its efforts to deliver things quickly at the lowest possible cost. ProPublica in December revealed internal Amazon documents showing speed over safety in its delivery network, following other investigations revealing injuries and deaths that accompanied Amazon's rapid expansion of its delivery program.

The Bear Down experience also shows how difficult it is to get started in such endeavors. When Amazon courted entrepreneurs, it touted the prospect of earning $ 300,000 a year with as little as $ 10,000 in upfront costs, significantly less than most franchise businesses that can cost more than $ 100,000 to launch.

(Updated with job cuts in Florida, Texas and Alabama in the second paragraph.)

To contact reporters on this story: Spencer Soper in Seattle at [email protected]; Matt Day in Seattle at [email protected]

To contact the editors responsible for this story: Robin Ajello at [email protected], Andrew Pollack

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