Amazon's delivery contractors announce upwards of 1,800 layoffs even as the mega-retailer's logistics demand balloons
- A slew of Amazon delivery service partners (DSP) nationwide have announced layoffs this month.
- Business Insider has learned that Letter Ride, an Amazon DSP, is laying off nearly 900 workers in California and Texas. These companies deliver Amazon packages to customers' homes.
- Several outlets previously reported layoffs in Georgia, North Carolina, Ohio, Texas, Mass., and Conn. after those DSPs lost their Amazon contracts.
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A slew of its Amazon's delivery service partners (DSPs) that deliver packages to customers' homes have announced layoffs this month.
Business Insider has learned that Letter Ride, an Amazon DSP, is laying off nearly 900 workers in California and Texas. The last-mile delivery company filed Worker Adjustment and Retraining Notifications in both states. It did not immediately respond to requests for comment.
Nationwide, more than 900 employees at Urban Mobility Now and Inpax, both of whom also provide last-mile delivery services for Amazon, learned in recent weeks that they would be laid off. Drivers, dispatchers, and managers will be affected.
DSPs are small, third-party delivery companies that typically work exclusively for Amazon. Amazon puts DSPs in charge of drivers' wages, insurance, health benefits, and vehicle maintenance.
"We work with a variety of carrier partners to get packages to Amazon customers and we regularly evaluate our partnerships," a company spokesperson told Business Insider. "We have ended our relationship with these companies, and drivers are being supported with opportunities to deliver Amazon packages with other local Delivery Service Partners."
Amazon, meanwhile, retains power over many other aspects of these drivers' jobs, according to legal filings and interviews with more than 40 delivery workers, including drivers, supervisors, owners of courier companies, and Amazon logistics managers.
For Amazon, this system of contracting delivery jobs is a cost-effective alternative to direct employment.
"This mass layoff is expected to be permanent," Inpax CEO Leonard Wright wrote in its letter to the state of Georgia, according to a document posted by the Atlanta Business Chronicle.
Here's a list of layoffs we already know about:
- Letter Ride, Texas, 423 jobs eliminated
- Letter Ride, California, 474 jobs eliminated
- Inpax, Georgia, 162 jobs eliminated
- Inpax, North Carolina, 199 jobs eliminated
- Inpax, Ohio, 64 jobs eliminated
- Inpax, Texas, 228 jobs eliminated
- Urban Mobility Now, Massachusetts, 201 jobs eliminated
- Urban Mobility Now, Connecticut, 74 jobs eliminated
Amazon confirmed that it ended its relationship with these three DSPs, and that the company will support laid-off drivers with new DSP opportunities.
Inpax declined to comment for this story. Urban Mobility Now, which did not answer its phones, has already shut down its website and pages on LinkedIn and Facebook, and could not be reached for a comment.
Amazon contracts can prove to be pitfalls for logistics companies
Amazon has been actively expanding its logistics network as it becomes its own biggest delivery provider. As part of that growth, it has recruited and hired dozens of people over the last year to start and operate new DSP companies delivering Amazon packages. Each of these companies is expected to ultimately grow their fleets to 40 vehicles.
The layoffs could be a sign that Amazon is moving to rely more on these newer, smaller companies, over its older partners.
At the same time, Amazon has been moving other parts of its logistics operations in-house as it grows a network of planes, trucks, vans, and even ocean freighters. The in-sourcing moves have been particularly taxing to companies who provide Amazon with their delivery services.
This is because the companies Amazon uses for logistics often depend on the retail giant for a large part of their revenue, so when Amazon curtails its business, its partners are often forced to readjust their yearly outlooks.
In February, Amazon's transition to move its own packages slashed $600 million in expected revenues at XPO Logistics - the top logistics company in the US by revenue in 2018. XPO's leading business with Amazon was taking packages from the company and delivering them via the US Postal Service, otherwise called "postal injection," Seaport Global analyst Kevin Sterling previously told Business Insider.
A $402 million trucking company went under in Feb., a bankruptcy that analysts said was partially because of Amazon's in-housing moves.
Other companies have found that Amazon is a big customer, but not one that drives massive profits. In May, FedEx unexpectedly announced that it would no longer fly Amazon packages.
A Business Insider report showed that that may have been motivated by the low margins Amazon packages carry. While FedEx's air networks had been carrying a lot of parcels, the company's financial statements indicated that those huge amounts of packages weren't generating a lot of profit.