Once heavily dependent upon the U.S. Postal Service, FedEx, and UPS to deliver its packages to its customers, Amazon.com (NASDAQ:AMZN) is increasingly taking the business of shipping into its own hands. That's not necessarily good news for the people delivering the packages, however.
Instead of hiring and paying delivery drivers directly, Amazon prefers to work through a bevy of contractors to move its goods from warehouse to consumer, who are required to lease vans from Amazon and buy their insurance and manage their payrolls through providers Amazon directs. As Buzzfeed News reported today, the company especially prefers to work through a big bevy of small contractors -- companies that may be more dependent upon retaining Amazon as a customer and less inclined to balk at such requirements.
BuzzFeed reports that over the past several months Amazon has terminated contracts with eight largish contract delivery companies -- Transportation Brokerage Specialists of California, Bear Down Logistics, Express Parcel Service, Delivery Force, Urban Mobility Now, RailCrew Xpress, Dash Delivery, and 1-800 Courier -- which serviced customers in 18 states.
The loss of this business has prompted the contractors to inform workforce regulators of impending layoffs of "at least 3,242" of their own employees. These layoffs come on top of 2,000 other layoffs prompted by Amazon terminating delivery contracts with three other contractors last year.
Amazon explained those earlier contract terminations as being prompted by the contractor companies' failure to "meet our bar for safety, performance or working conditions" -- specifically, by getting into accidents and thereby tarnishing Amazon's brand. But at least some contractors say "Amazon's termination decisions are capricious and inconsistent," BuzzFeed reports.
Whichever company is actually right, it looks like it's going to cost thousands of workers their jobs.
Editor's note: Responding to this article, an Amazon spokesperson offered the following statement:
"Sometimes the companies we contract with to deliver packages do not meet our bar for safety, performance, or working conditions. When that happens we have a responsibility to terminate those relationships and work to find new partners. We care a lot about the communities where we operate and work hard to ensure there is zero or very little net job loss in these communities. In fact, in the past six months, more than 300 new Delivery Service Partners have launched their businesses with Amazon, creating job opportunities for nearly 15,000 drivers."