REDWOOD LOGINREDWOOD PORTAL
Thousands of Amazon-contracted delivery drivers are losing their jobs, as Amazon has started dropping a number of contracts with some small to mid-size trucking companies, due to safety concerns. Several contracted delivery companies have issued Worker Adjustment and Retraining Notification (WARN) Act notices, which is essentially a mass layoff of drivers and employees. This comes in the wake of Amazon looking to make steps forward in terms of on-road safety throughout its delivery network.
A few years ago, Amazon realized how vulnerable they were when it came to delivery. Their carriers, like UPS and FedEx, held the power in terms of speed and service. Amazon couldn’t maintain complete control over cost or delivery speeds, so they decided to launch their own network of shipping contractors. This transferred a lot of the power of Amazon logistics out of the hands of major carriers, allowing smaller businesses and entrepreneurs to get their hands in the transportation pot.
This allowed Amazon to maintain control over the standards their drivers have to follow, while also promoting the entrepreneur model that Amazon.com follows with their third-party seller platform as well.
Each company or individual contractor has complete control over their own fleet, but they must follow Amazon’s performance and safety standards. That’s where the recent layoffs have come about. There are individual companies that are contracted with Amazon that are not meeting Amazon’s rules for safety, so Amazon has decided to terminate those contracts.
A spokeswoman for Amazon addressed the reasons why all of these layoffs, across multiple small to mid-size companies, are occurring. Along with their Delivery Service Partner program, Amazon has contracts with a number of small logistics companies. She stated that they’ve been taking a look at these companies, and they’re not meeting Amazon’s bar for safety, performance, or working conditions. Amazon withholds the right to terminate contracts with companies that aren’t meeting their standards. And that’s what they’re doing.
Amazon also stated that despite all the current layoffs, this step should likely have little impact on drivers. Amazon is going to work with the truck drivers to move them into positions with other Amazon partners and contractors that are meeting the bar for safety. They hope for minimal job loss, especially amidst the driver shortage.
But why is this upheaval happening?
There’s a catch-22 here for delivery contractors. Amazon claims to put safety above all else, but it seems they actually value speed and efficiency as their primary objective. Some contractors feel obligated to deliver fast and furious, regardless of safety practices.
All contractors are required to uphold Amazon’s strict regulations. However, Amazon’s primary performance standard is a rate of 999 out of 1,000 packages delivered on time. This level of performance and speed has been considered to be more important than Amazon’s safety standards.
Also, contractor vans tend to be smaller and under the weight threshold for regulation by the Department of Transport. That means they don’t need to adhere to the same safety measures, like hours-of-service or vehicle inspections. This could potentially have allowed some contractors to cut corners in terms of safety.
Amazon has been in a lot of hot water recently because of this. There have been reports that Amazon officials were ignoring signs that safety was a concern. Drivers felt they were overloaded with too many packages, and they were expected to deliver shipments at an unreasonably fast pace. There seemed to also be a lack of training, even when Amazon announced they’d be providing more on-road training (and it never came to fruition).
In addition, Amazon hasn’t taken responsibility for any of their partners’ accidents or exploitations. The question has become: is Amazon responsible if their contractors (who serve Amazon and Amazon only) aren’t meeting safety standards? It’s been a bit of a gray area, but Amazon had previously not taken action or blame.
Regardless of whether Amazon does or does not prioritize safety, enough bad publicity is pushing Amazon to take more precautions. That’s where the contract terminations come in. They’ve been in trouble with safety concerns before, and now they’re stepping up to take responsibility for their extended fleet.
We don’t expect this will have a huge impact on drivers, who are in high demand. Ultimately, we believe this could positively impact the entire logistics industry. We anticipate (and hope) that Amazon will continue to emphasize safety along with speed, reliability, and cost. After all, Amazon is responsible for hundreds of trucks and drivers on the road, and they have a huge influence on the overall logistics sector.
Amazon is a leader in retail and logistics. Prioritizing safety could have larger ramifications for the improvement of the overall supply chain.
Want to stay up to date on the hottest news in the industry? Sign up for the Redwood newsletter to get relevant news and industry content delivered straight to your inbox. No spam, just the good stuff.