Two years into an effort to build up its own delivery network, Amazon is cutting ties with some small logistics firms, and that’s setting up a wave of driver layoffs around the Tampa Bay area and beyond.
Locally, Express Parcel Service is the latest logistics company to notify state officials of pending layoffs. The Texas-based company plans to cut 108 jobs — 100 of them for couriers — in St. Petersburg and Tampa as of April 12. It also is shutting down operations at Amazon’s delivery stations at 9900 18th St. N in St. Petersburg and 8824 E Adamo Drive in Tampa due to the end of its business relationship with Amazon.
The delivery centers allow drivers who typically work for contractors hired by the online retailing giant to pick up orders and deliver them to customers in as little as one to two hours through Amazon Prime.
On a normal day at the St. Petersburg center, one driver said last fall, there are 300 to 500 routes available, each with a set of packages to be delivered. Drivers sign up for the routes, known as blocks, using an Amazon Flex delivery app, and usually there are more drivers ready to deliver than blocks available, creating a rush to sign up.
To help deliver those packages, Amazon launched a program in June 2018 to encourage entrepreneurs to lease vans, hire drivers and become delivery partners with the company. Amazon told prospective partners that startup costs could amount to as little as $10,000, Bloomberg News reported. Since then, more than 800 companies have signed up nationwide, employing about 75,000 drivers.
Now, however, the company says it’s cutting ties with a different set of logistics companies that it began working with before the initiative to develop its delivery network.
“Prior to launching the Delivery Service Partner program to empower entrepreneurs to build their businesses with Amazon, we contracted with a number of small logistics companies," a company spokeswoman said in an email to the Tampa Bay Times.
“Some of these companies have not met our bar for safety, performance or working conditions, and we’re in the process of exiting them from the program,” the company’s statement said. “We are planning for there to be zero or very little net job loss in these communities” as a result of the contracts being terminated "because nearly all impacted employees of these companies will have an opportunity to move into other delivery driver roles with Amazon partners.”
Statewide, Express Parcel Service plans to cut 267 jobs in Miami, Fort Myers and Palmetto in Manatee County as well as in the Tampa Bay area.
Express Parcel is the second company to announce bay area Amazon-related layoffs. Arkansas-based RCX Logistics, also known as Railcrew Xpress, said it will close its Tampa operation permanently and lay off 72 employees, all but four of them delivery drivers, as of April 12 as a result of Amazon cancelling its contract.
This isn’t only happening in the bay area and Florida. RCX Logistics also will close operations in Mobile, Ala., Houston and Austin, Texas, affecting a total of about 350 positions, human resources vice president Sandy Walker said. She said she couldn’t discuss any reasons that Amazon gave for the contract cancellation or how much notice it provided. Bloomberg reported that another company, Bear Down Logistics of Illinois, will close operations in five states and eliminate hundreds of delivery jobs.
Because the companies in the delivery partner program tend to be small, Bloomberg reported, Amazon has more leverage in negotiating contracts than it would if it were dealing with major delivery services like the the postal service, United Parcel Service and FedEx Corp. That, in turn, can mean lower wages for drivers delivering for small carriers compared to drivers for large logistics companies.
Meanwhile, as Amazon built its own network of delivery contractors, FedEx last year terminated its contract with Amazon in favor of providing e-commerce deliveries for other retailers such as Target and Walmart.