Amazon Ends Ties to Delivery Partner, Erasing Hundreds of Jobs




 

(Bloomberg) -- An Illinois company that rapidly expanded over the past two years to deliver packages for Amazon.com Inc. is shuttering operations in five states and letting go hundreds of drivers after failing to meet the e-commerce giant's standards.

The shuttering of Bear Down Logistics underscores the challenges Amazon faces outsourcing deliveries to new, untested companies instead of traditional partners such as United Parcel Service Inc. and FedEx Corp. It also serves as a warning to Amazon delivery partners that the company is an exacting client willing to cut them off.

Bear Down Logistics notified Ohio, Virginia, Minnesota and Illinois that it would close facilities in those states in April, resulting in the loss of almost 280 jobs. Another Bear Down facility near Grand Rapids, Michigan, will also close in April, according to documents reviewed by Bloomberg. About 120 drivers work at the Michigan facility, said a person familiar with the matter who spoke on condition of anonymity due to company policies about speaking with the media. The company also has Amazon delivery operations in Wisconsin, the status of which was not immediately clear.

"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 said in an email. "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." Calls to Bear Down Logistics weren't immediately returned.Calls to Bear Down Logistics weren't immediately returned.

Amazon in 2018 launched a program encouraging aspiring entrepreneurs to lease vans, hire drivers and build their own businesses delivering packages to its customers. More than 100 such businesses have sprouted around the country, helping Amazon increase delivery capacity. Amazon also has greater negotiating leverage over each small operator than it does with larger delivery partners like UPS, FedEx and the U.S. Postal Service.

Drivers working for Amazon delivery partners typically earn less than their counterparts working at larger delivery companies like UPS, which helps Amazon lower costs. One driver working for Bear Down Logistics in Michigan said he earned about $15 an hour delivering Amazon packages, while UPS paid seasonal drivers doing the same work in that area about $20 an hour.

A big challenge for Amazon is balancing safety with its efforts to deliver things quickly at the lowest possible cost. ProPublica in December revealed internal Amazon documents showing it prioritized speed over safety in its delivery network, which followed other investigations exposing the injuries and deaths that accompany Amazon's quick expansion of its delivery program.

The Bear Down experience also shows how hard it is to make a go of such businesses. When Amazon courted entrepreneurs, it touted the prospects of earning $300,000 a year with as little as $10,000 in up front costs, significantly less than most franchise businesses that can cost more than $100,000 to launch.

(Updates with extended comment from Amazon.)

To contact the reporter on this story: Spencer Soper in Seattle at ssoper@bloomberg.net

To contact the editors responsible for this story: Robin Ajello at rajello@bloomberg.net, Andrew Pollack

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

COMMENTS

More Related News

Amazon to suspend delivery service competing with UPS, FedEx
Amazon to suspend delivery service competing with UPS, FedEx

The online retailer told customers that the service, Amazon Shipping, will be paused starting in June, according to the Wall Street Journal, which was first to report the change. Amazon is suspending the service because it needs people and capacity to handle a surge in its own customers' orders, the Journal reported, citing sources. "We regularly look at a variety of factors across Amazon to make sure we're set up in the right way to best serve our customers," an Amazon spokesperson told Reuters in an email confirming the halt in service.

Boris Johnson Is Moved to Intensive Care With Covid-19 Worsening
Boris Johnson Is Moved to Intensive Care With Covid-19 Worsening

(Bloomberg) -- Boris Johnson has been taken into the hospital intensive care unit for treatment for coronavirus after his condition worsened, his office said. Foreign Secretary Dominic Raab is now deputizing for the U.K. prime minister. Johnson, 55, was admitted to St Thomas' Hospital in London for tests on Sunday night because his virus symptoms had not cleared up, and he became more seriously ill on Monday afternoon, a government spokesperson said in an email.He remains conscious and was moved to intensive care at about 7 p.m. in case he needs ventilation to help him recover, an official said. The pound fell."The prime minister is in safe hands with that brilliant team at St Thomas's...

Leaked memo: Amazon is now recommending the workers sorting and moving your online orders wear face masks, but will only have
Leaked memo: Amazon is now recommending the workers sorting and moving your online orders wear face masks, but will only have 'limited' quantities

Amazon employs some 400,000 warehouse workers across 175-plus facilities. Workers at more than 50 warehouses have tested positive for the coronavirus.

U.S. Stock Futures Rise as Virus Deaths Ease: Markets Wrap
U.S. Stock Futures Rise as Virus Deaths Ease: Markets Wrap

(Bloomberg) -- U.S. stocks futures advanced after the daily reported death toll in some of the world's coronavirus epicenters was lower on Sunday. Oil tumbled.The latest fatality figures provided some respite to the onslaught of recent negative virus headlines, though the economic impact will continue to bite for some time. S&P 500 futures opened more than 1% higher, and contracts in Japan also climbed. The pound dipped as U.K. Prime Minister Boris Johnson was admitted to hospital for tests after suffering from the coronavirus for 10 days. Oil sank as uncertainty remains over a proposed meeting of supplier nations that is planned for April 9. In the latest developments on the health...

'I'm worried that I have infected 1000 people in the last three days': Amazon workers reveal all the reasons why they're afraid to go to work

Amazon workers claim the company is not doing enough to prevent the spread of COVID-19 throughout their facilities and the communities they serve.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy