Amazon Cuts More Than 1,200 Contract Delivery Jobs

Amazon is cutting some 1,200 delivery drivers after it severed contracts with several small firms that employed them.

Amazon  (AMZN) - Get Amazon.com, Inc. Report is cutting more than 1,200 delivery drivers after the online-retail and tech giant severed contracts with small delivery companies that employed them. 

At last check the Seattle company's shares were up slightly to $3,170.

Amazon informed at least seven firms that were part of its Delivery Service Partner program that it was severing their contracts, CNBC reported.

The companies in turn said they would be laying off roughly 1,205 drivers and closing facilities in Worker Adjustment and Retraining Notification filings submitted this month and in recent months. 

The federal WARN Act requires employers to give notice, generally 60 days, of mass layoffs and plant closings.

Launched in 2018, the DSP program has enabled Amazon to quickly scale up its last-mile delivery capabilities and compete with shipping partners like UPS  (UPS) - Get United Parcel Service, Inc. Class B Report and FedEx.  (FDX) - Get FedEx Corporation Report

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DSPs are contracted delivery providers, usually distinguishable by Amazon-branded cargo vans. They are responsible for picking up packages from Amazon delivery stations and dropping them off at doorsteps. 

More than 1,300 DSPs across five countries have added 85,000 jobs and delivered more than 1.8 billion packages worldwide, Amazon said in a blog post earlier this month. 

Amazon said in a statement that “we work with a variety of carrier partners to get packages to Amazon customers and we regularly evaluate our partnerships." 

"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," the company said.

The coronavirus pandemic sparked a surge in online delivery services as consumers attempt to comply with social distancing requirements.

In June, Deutsche Bank's Lloyd Walmsley wrote in a note that Amazon is the "clear winner" from covid-19 disruptions, and that consumers are likely to continue shopping on Amazon at elevated levels even after lockdowns ease. 

Last month, Amazon reported second-quarter revenue that easily topped analyst estimates and beat on earnings as well.