Amazon has abruptly canceled its contracts with three major delivery firms, a move that will put more than 2,000 people out of work and may signal a shift in how the online retail giant plans to deliver millions of packages to homes across the country every day.
Inpax Shipping Solutions, based in Atlanta, has told employment regulators in six states that it would lay off at least 925 employees beginning Oct. 2 and would cease all delivery services for Amazon by early December, according to government records.
Another contractor, Sheard-Loman Transport, said in a court filing late last month that its Amazon contract would not be renewed, a move that it called “completely unexpected and a cause for serious concern,” and that is said would lead to the firing of roughly 200 employees in three states. The firm, headquartered in Chicago, said it would cease delivering Amazon packages on Sept. 30.
And a third company, San Diego-based Letter Ride LLC, told labor authorities in California and Texas that in early December it would begin laying off 897 drivers, dispatchers and other employees.
The contract terminations follow recent investigations of Amazon’s fast-growing delivery network by BuzzFeed News and ProPublica, which focused on how the intense financial and deadline pressure Amazon puts on its growing fleet of independent delivery contractors can lead to worker mistreatment and threaten public safety. The news organizations documented deaths linked to each of these three contractors.
In December 2016, a van driven by an Inpax employee hit and killed Telesfora Escamilla, an 84-year old grandmother in Chicago. The driver was charged with reckless homicide but ultimately acquitted. A civil suit brought by the family of the victim claims that Amazon put undue time pressure on Inpax and its drivers; the suit is pending and Amazon has denied responsibility.
In June 2018, a 21-year old Sheard-Loman driver, Traivon Hemingway, was killed when his van cut across several lanes of a freeway, also in Chicago, before crashing into a tractor-trailer.
That same month, Stacey Hayes Curry, a 61-year-old legal secretary, was run over by a Letter Ride driver delivering Amazon packages in the San Diego office park where she worked. The driver pleaded guilty to a misdemeanor charge of vehicular manslaughter.
Curry’s son, Tyler Hayes, said Amazon still needs to do more to make its delivery system safe.
“I wish Amazon would prioritize worker and pedestrian safety as it contracts out these last-mile delivery companies but I have yet to see any attempt at improving safety,” Hayes said in an email. “It seems to only want to hide behind third-party contractors as a way to escape responsibility.”
Amazon said in a statement: “We work with a variety of carrier partners to get packages to Amazon customers and we regularly evaluate our partnerships. We have ended our relationship with these companies, and drivers are being supported with opportunities to deliver Amazon packages with other local Delivery Service Partners.”
As reported by BuzzFeed News and ProPublica, Amazon began building out a network of delivery firms in the U.S. in 2014. Rather than hire its own drivers, Amazon chose to use contractors such as Inpax, Sheard-Loman and Letter Ride that in turn employ drivers. Though Amazon controls many aspects of delivery, down to providing turn-by-turn directions for drivers, it denies all liability when workers are exploited or people are hurt in crashes, leaving the contractor on the hook.
Drivers for these firms generally aren’t required to have any delivery experience and are given just a few days of training before being put on the road, at times in poorly maintained or damaged vans with no markings to indicate they are carrying only Amazon packages. Many drivers report being expected to deliver upwards of 300 packages a day, pressure that prompts some to skip lunch and to urinate in bottles. Some of the businesses have struggled. At least three Amazon delivery contractors have filed for bankruptcy protection since 2018, court records show.
Meanwhile, drivers delivering Amazon packages have been involved in more than 60 serious crashes, including at least 10 that have resulted in fatalities. Numerous contractors have been found by the Labor Department to have underpaid or otherwise exploited workers, federal records show.
Amazon has relied on established logistics firms like Inpax — with large fleets operating in multiple locations — to deliver many of its packages. But in the past year, the company has shifted toward smaller firms working out of just one or two delivery stations. Often, the owners of those newer companies have no experience in delivery or as business owners, and some rely on loans from Amazon to start their new companies.
In a letter late last month to three U.S. senators, Amazon disclosed that it has some 800 delivery firms under contract, but it refused a request from the lawmakers — Richard Blumenthal, D-Conn., Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio — to provide the names of those firms, calling that information “proprietary.”
Sheard-Loman began delivering for Amazon in 2017, and until recently operated out of locations in Illinois, Louisiana and Maryland. Its owners are Jeffery Sheard and Richard Loman, who is also a real estate agent.
Last December, Sheard-Loman and Amazon were named co-defendants in two federal lawsuits filed by drivers who alleged the company had underpaid them and were seeking class-action certification. In one of those cases, settlement talks are underway and neither defendant has filed a response; in the other, Sheard-Loman hasn’t filed a response and Amazon has denied liability because it wasn’t the plaintiff’s employer. A third employment suit was filed against Sheard-Loman in August in federal district court for the Northern District of Illinois. In a Sept. 26 filing in that case, the firm said Amazon had declined to renew its contract, but has not yet responded to the claims in the suit.
In a brief interview, Loman confirmed that Amazon had terminated its contract, and he said it was unlikely the business would continue as the e-commerce giant was his company’s only client.
Court records show that Letter Ride, founded in 2015, has been sued at least 13 times in the past 20 months over crashes or allegations of employee mistreatment. Curry’s family settled a claim with Letter Ride’s insurer and did not file suit. Letter Ride referred a reporter’s calls about Amazon’s decision to terminate its contracts to an attorney, who did not return a call seeking comment.
Inpax’s owner, Leonard Wright, has run various companies in the logistics and shipping business since the 1990s. Inpax began delivering packages for Amazon in 2015, and Wright has said that contract brings in 70% of the company’s revenue. His firm has shown signs of growing financial strain for some time. In the past several years, Inpax has been sued by employees, lenders and even its own law firm, all of whom claim they were not properly paid.
One of those lawsuits brought against Inpax by employees in Ohio who claim they were underpaid is ongoing, and the plaintiffs’ attorney in the case, Christopher Wido, said he’s considering naming Amazon as a joint employer in the suit. “Make no mistake, regardless of this development, we will continue to pursue these claims vigorously until our clients and the class they seek to represent are paid the wages they are owed,” he wrote in an email. In a court filing, Inpax denied that it failed to pay minimum wage and overtime.
This month, Inpax notified regulators in Georgia, Texas, Ohio, North Carolina, Florida and Illinois that it would cease delivery operations for Amazon in those states. Those layoffs were first reported by the Atlanta Business Chronicle and Dallas Business Journal.
One driver who recently worked for Inpax said there was “a lot of sadness” surrounding the announcement because “most of the employees have families and bills.” But two other drivers familiar with Inpax said many laid off employees are already in conversations to be rehired by other Amazon delivery contractors operating out of the same warehouses. According to one Inpax employee in North Carolina, there’s already a new contractor poised to take over Inpax’s routes. The employees spoke on the condition of anonymity because they have either found work with Amazon or one of its contractors or hope to, and feared retribution if they were named.
Inpax did not respond to requests for comment.
This is not the first time Amazon has elected to cut off established delivery firms on short notice.
In early 2016, it severed ties with a Florida-based firm, VHU Logistics, less than a year after awarding the company its first routes. The firm had complained that Amazon was not paying its invoices on time, leading it to miss payroll for its drivers. That sparked a federal Department of Labor investigation that found Amazon bore responsibility for nearly 200 workplace violations. After canceling its contract with VHU, Amazon sued the delivery company in a bid to recover the back wages the Labor Department ordered the online retailer to pay and was awarded $296,906 in damages by the court. The two parties ultimately settled the matter.
And this past spring, Amazon told the California-based owner of three delivery contractors that it would no longer need their services, which the owner said put 875 drivers out of work. When the owner, Thomas Chen, complained, he said Amazon made an offer of $400,000 as part of a separation agreement — later raised to $800,000 — in exchange for signing a nondisclosure agreement and walking away.
Chen, who had taken delivery on more than 100 new vans just weeks before being told he was being cut off, refused the offer and sued Amazon. Court records show the company has not yet responded to that complaint.