Amazon’s trucking ambitions collide with driver shortage and competition – .

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Amazon’s trucking ambitions collide with driver shortage and competition – .


LOS ANGELES / CHICAGO, December 8 (Reuters) – Pressure from Amazon.com Inc (AMZN.O) to recruit contractors of large rigs to transport goods through its warehouse network is meeting a shortage of truckers as the e-commerce company moves what is expected to be a record number of packages this holiday season.

His project, called Amazon Freight Partners (AFP), uses independent trucking companies to move goods between Amazon facilities. The companies, or AFP, all of which are Amazon’s sole contractors, also transport packages to and from the fleet of 85 North American planes owned or leased by the company.

Since 2019, Amazon has recruited 250 AFPs around the world and has enabled companies “to start and grow their own transport businesses and create job opportunities for thousands of drivers,” said a spokesperson for Amazon. This trucking network – separate from the army of home delivery contractors who drop Amazon packages right on shoppers’ doorsteps – puts small AFPs in fierce competition for drivers against Walmart Inc (WMT.N) and United Parcel Service Inc (UPS.N).

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“There is a shortage of drivers, especially good drivers,” said Ebony McKinley, owner of the family business Seven Strong Trucking. The Phoenix-area company was among the first to join the AFP program in April 2020. It now has 20 Amazon-branded semi-trailers under AFP and employs 45 drivers.

Amazon’s logistics unit bought 1,395 Amazon-branded large tractors to pull freight trailers in the United States, according to Department of Transportation data seen by Reuters. Much of the responsibility for filling the seats in these vehicles rests with independent contractors like McKinley at a time when the industry has a record deficit of 80,000 large truck drivers. “Everyone is feeling the heat,” she said.

Labor issues are especially acute for large-platform trucking companies because their drivers need more credentials: government agencies require them to have commercial driver’s licenses, and insurers increasingly require two years of experience. Skilled drivers can take new jobs with better pay amid record demand for consumer goods.

Seattle-based Amazon said in October that higher wages, more incentives for workers and inflation in services such as trucking contributed $ 2 billion in additional spending in the previous quarter. Amazon expects those costs to double for the current holiday quarter, threatening to wipe out profits in its biggest selling period.

Truck drivers’ wages have not kept pace with inflation, leaving “real” earnings at 70% of what they were in the 1970s, according to the US Bureau of Labor Statistics (BLS). Federal limits on daily work hours, the COVID-19 pandemic and other obstacles have prompted many truck drivers to quit.

At Seven Strong, new drivers start at $ 22 an hour. Benefits include a $ 1,500 hiring bonus and overtime pay. Base salary roughly matches the median salary of all American truck drivers, which is $ 47,130 per year, or $ 22.66 per hour, according to the BLS. Owner McKinley said Amazon’s payments covered the driver’s compensation.

RECRUIT, RETAIN

AFPs across the United States advertise wages of $ 18 to $ 27 an hour before benefits, with many nights at home, according to a Reuters review of dozens of help ads on Indeed, ZipRecruiter and ‘other online sites. Signing bonuses ranged from $ 1,000 to $ 2,000, according to publications.

Amazon told Reuters it recommended a minimum contract wage for AFP drivers, but also encouraged entrepreneurs to pay more to find and retain talent.

If Amazon were to dictate wages for truckers, it could break rules for independent contractors at a time when some states want those workers classified as employees, legal and trucking experts have said.

Two current AFPs, who declined to be appointed for fear of reprisal, told Reuters the work was regular and predictable – although they said other less experienced operators could be overwhelmed with overtime and delays. unforeseen expenses.

While the stability and reliability offered by established trucking employers like Walmart or UPS may appeal to older and more experienced drivers, small trucking business owners may be drawn to the growth opportunities with Amazon.

“Hitching your wagon to the Amazon train – it’s hard to refuse,” said Page Siplon, managing director of TeamOne Logistics, a third-party logistics company with 700 drivers in 43 states that doesn’t work with Amazon.

COMPETITION HOTS

Amazon is forecasting net sales of $ 130 billion to $ 140 billion in the fourth quarter, up 4-12%, which could translate into an increase in the number of packages it handles. This year, that could mean it processes 32 million packages in the United States on a peak day, said Marc Wulfraat, chairman of consulting firm MWPVL International.

Amazon’s former shipping partner FedEx Corp (FDX.N) also reported quarterly profit impacted by unforeseen costs, primarily from its ground delivery unit which relies on contract drivers.

Employers of UPS and Walmart truckers have not been immune to the pressure, but have not reported the same level of cost concerns.

UPS, which counts Amazon as its main customer, has spent more on its well-paid, unionized workforce that appears to offer job stability without profit.

Walmart, which has more than 11,000 large truck drivers on its payroll, said higher supply chain costs have reduced its gross margin in the United States by 12 basis points in the last trimester.

Walmart is raising wages and softening bonuses for its decades-old in-house trucking operation that uses 8,400 owned and leased tractors to move goods for its more than 5,300 US Walmart and Sam’s Club stores. Walmart – which primarily employs long-haul truckers – advertises immediate truck driver jobs with starting salaries of $ 87,500, not including signing bonuses of $ 8,000 or $ 12,000. Peak season premiums for working an extra day sometimes drop from $ 150 to $ 250 a day, a Walmart spokesperson said.

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Reporting by Lisa Baertlein in Los Angeles and Richa Naidu in Chicago; Additional reporting by Jeffrey Dastin in Palo Alto, CA Editing by Vanessa O’Connell and Matthew Lewis

Our Standards: Thomson Reuters Trust Principles.

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