Amazon is cutting ties with small delivery firms in the US because they don't meet its delivery standards, putting at least 1,300 drivers out of work
- Illinois, Washington and Kansas firms are among those culled — About 1,300 drivers in several states will lose their jobs
Context & Ripple Effects
This cull extends a purge that began months earlier, when Amazon cancelled contracts with three delivery firms following a BuzzFeed News investigation into shoddy working conditions and fatal accidents across its subcontracted delivery network. The stated reason has shifted from safety scandal to missed delivery standards, but the mechanism is the same: Amazon holds the contracts and small operators bear the consequences.
The stakes for those operators were made explicit two years on, when four delivery service partners described racking up debts of tens of thousands of dollars after abrupt contract terminations. With at least 1,300 drivers now out of work across Illinois, Washington and Kansas, the DSP model looks increasingly like a business where Amazon sets the terms and exits without warning.
First-order effects
- At least 1,300 drivers at small delivery firms in Illinois, Washington, Kansas and other states lose their jobs immediately as Amazon terminates their employers' contracts.
- Surviving delivery service partners face a raised performance bar, knowing Amazon will sever ties rather than remediate underperforming firms.
Second-order effects
- Recruiting into the DSP program gets harder: prospective owner-operators can now point to both the 2020 cull and the later debt-ridden terminations as evidence that Amazon's contracts carry unpriced termination risk.
- Amazon absorbs more of the network directly or concentrates volume among larger, better-capitalized partners, squeezing out the small-firm tier it originally built the program to attract.
Third-order effects
- If the pattern holds, Amazon's last-mile consolidates around fewer, bigger operators and in-house capacity — a trajectory consistent with UPS planning to eliminate 30,000 jobs while winding down its own Amazon partnership for $3B in savings.
- Subcontracted delivery labor emerges as the shock absorber of e-commerce logistics: workers and small firms absorb demand swings and quality mandates, while the platform retains pricing power and exit optionality.
The trend: Amazon is steadily tightening control of its last-mile network, converting a fragmented subcontractor base into a smaller set of replaceable partners who carry the operational and financial risk.