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Amazon Lining Drivers’ Pockets in Rugged Labor Market

Amazon said it will boost pay and benefits for delivery drivers ahead of the peak shipping season, amid a broader landscape of labor volatility in logistics.  

The e-commerce company said it will raise rates for Delivery Service Partners (DSP) drivers, offer as much as $5,250 annually for college and other educational programs and establish a 401(k) plan. Amazon said it’s spending more than $450 million over the next year on the rate increases and additional benefits.

The company declined through a spokesperson to offer specifics around the rate increases. The spokesperson also declined to say whether the roughly $60 million it’s providing DSPs to help with an employer match in the first year of the 401(k) program will continue in subsequent years. 

Amazon said it’s pumped more than $7 billion since the 2018 start of the DSP program into safety technology, driver training and rate increases among other things. 

Amazon’s DSP program is a key component of its last-mile delivery, with a network of small businesses that employ drivers to handle the final package drop off to consumers. The current network totals more than 3,500 globally, employing over 275,000 drivers. 

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Parisa Sadrzadeh, vice president of Amazon’s worldwide Delivery Service Partner Program, in a statement, said the DSP network generated some $26 billion in revenue since the launch of the program. 

The driver investments come as unrest grows among some of the e-commerce company’s warehouse workers.  

Amazon employees at a warehouse in Coventry, England on Thursday began to vote on a possible strike over pay, which would mark the first official strike vote in the U.K., according to the London-based union GMB. 

“Starting pay for Amazon employees has increased to a minimum of between 10.50 pounds ($12.05) and 11.45 pounds ($13.14) per hour, depending on location,” an Amazon spokesperson said Thursday in response to an inquiry on the strike ballot and subject of pay. “This represents a 29 percent increase in the minimum hourly wage paid to Amazon associates since 2018. On top of this, employees are offered a comprehensive benefits package that includes private medical insurance, life assurance, income protection, subsidized meals, an employee discount and more, which combined are worth thousands of pounds annually, as well as a company pension plan.” 

Last month Amazon air freight workers in San Bernardino, Calif. walked off the job to protest wages and safety issues. Workers in New York and Washington, D.C. earlier this year had similarly walked off the job to demand wage increases and breaks. 

As worker unrest spreads in warehouses, the delivery landscape has faced similar rough patches with drivers increasingly stretched to meet the demands of e-commerce’s continued growth.  

Amazon’s DSP program has been challenged in the legal system, with the most notable lawsuit being the class-action Fli-Lo Falcon filed in April in Washington district court. 

The complaint alleged Amazon does not allow DSP’s full control over their businesses, misrepresents how much businesses can actually make and prevents drivers from unionizing. It also attempted to argue DSPs, under Washington state law, should be classified as franchisees.

Amazon asked for the matter to be sent to arbitration to which a judge, earlier this month, agreed. 

Objections to the judge’s conclusion must be filed by Sept. 22. 

Elsewhere in parcel delivery, FedEx is battling former contractor Spencer Patton, who openly criticized the company’s handling of service contracts and other operational decisions. Patton threatened to shut the lights off on his 225 FedEx Ground routes come Black Friday, citing financial distress due to the delivery giant rejecting his request to renegotiate terms of his contracts. 

FedEx severed ties with Patton late last month on grounds laid out in the parcel carrier’s lawsuit, alleging he created “a fictionalized crisis” with the company for the benefit of his own consulting business. 

Results of a survey of roughly 1,200 Ground contractors undertaken by Patton’s Trade Association for Logistics Professionals (TALP) suggested broad dissatisfaction with FedEx. 

Results of the TALP survey, which was released Thursday, found 97 percent of those surveyed do not have confidence in FedEx Ground CEO John Smith, with 86 percent saying their requests to renegotiate their contracts in the past year were either denied or went unanswered. 

Meanwhile, the Teamsters, representing some 340,000 UPS employees, have ramped up efforts on a number of fronts within warehousing and logistics. Last month the union began raising awareness of UPS employees’ current contract expiration next year. Earlier this month the Teamsters announced the creation of an Amazon Division as a resource for workers looking to organize.