Amazon is severing delivery contracts in five states, affecting about 1,300 drivers, as it eliminates partners it says aren’t meeting its delivery standards, according to Bloomberg and other reports.
Affected companies include Bear Down Logistics, an Illinois company that is shutting down operations in five states after getting the boot from Amazon; Delivery Force, a contractor in Washington that is laying off 272 drivers in Seattle and other cities; and RCX Logistics of Kansas, a company with operations in Texas, Alabama and Florida that is eliminating more than 600 employees, Bloomberg reports.
Express Parcel Service of Texas is shutting down operations in Tampa and St. Petersburg, FL as a result of Amazon terminating its contract, according to the Tampa Bay Times.
Two years ago, Amazon began a program where entrepreneurs could lease Mercedes Benz sprinter vans and take out startup loans to start their own delivery service in support of the ecommerce giant.
More than 800 businesses have begun as a result of the program, representing 75,000 drivers around the country. At the same time this is creating less of a need for its existing contractors, resulting in the terminations.
Amazon has much more leverage over these new, smaller operators than over major carriers like UPS, FedEx – with which it severed ties in 2019 – and the U.S. Postal Service. UPS has been faring well as it steps up its Amazon business, while FedEx has begun adding some Express shipments to its Ground network to build ecommerce density.
“We have a responsibility to our customers and the communities where we operate to ensure these partners meet our high standards for things like safety and working conditions,” an Amazon spokeswoman told Bloomberg. “Occasionally we need to end a relationship with a partner and when this happens, we are committed to helping the impacted employees find opportunities with other delivery service partners or to learn more about the thousands of available roles at Amazon delivery stations and fulfillment centers.”