Amazon Cuts Delivery Contracts; 1,200 Jobs Lost

Amazon delivery van

Despite a 40 percent increase in revenue in the second quarter, Amazon has cut more than 1,200 delivery contract jobs.

CNBC reports the eCommerce leader has ended contracts with several small delivery firms across the U.S., spurring layoffs and causing them to pull out of Amazon facilities.

The network reported Amazon told at least seven of its delivery service partners (DSPs) that it was ending their contracts. In response, the companies said they would lay off 1,205 drivers.

Launched in 2018, the DSP program allowed Amazon to boost its last-mile delivery capabilities and compete with FedEx and United Parcel Service. DSPs are contracted delivery providers, usually use Amazon-branded vans and pick up packages from Amazon delivery stations and drop them off at homes or offices.

Among the DSPs that have announced layoffs, Courier Distribution Systems is laying off 273 drivers in Pennsylvania and Wisconsin; Systemize Logistics is closing locations in Connecticut and New York, eliminating 121 jobs; TL Transportation cut 80 jobs in Pennsylvania and is closing its New York warehouse, resulting in 76 layoffs; Prime EFS had to lay off 388 employees in New Jersey and Pennsylvania; JST Transportation laid off 51 employees in Massachusetts; Deliverol Global cut 41 jobs in Pennsylvania; and Sheffield Express laid off 95 employees in Connecticut.

“We have ended relationships with some partners and Amazon is working closely with all impacted drivers to ensure they find opportunities to deliver Amazon packages with other local Delivery Service Partners with little to no disruption to pay,” an Amazon spokesperson told CNBC.

In February, Amazon ended contracts with Transportation Brokerage Specialists, Bear Down Logistics, Express Parcel Service and Delivery Force and others, resulting in 2,000 layoffs.

Earlier this month, Amazon said on its blog that more than 1,300 DSPs in five countries had added 85,000 jobs and delivered more than 1.8 billion packages worldwide.

Last month, Amazon announced it has expanded testing of its delivery robot Scout.

Amazon said in late May that it planned to keep more than half of the 175,000 workers it brought on board during the coronavirus pandemic.

In July, Amazon said it will restrict its storage capacities in warehouses as the coronavirus continues to surge and the holidays are still ahead, a company blog post said.

The company said it has put new limits in place on Inventory Performance Index (IPI) minimum threshold requirements, stating that sellers below 500 IPI will have new limits.