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ORLAND, Calif. — Two of the three independent delivery companies based at the Amazon facility on the outskirts of this Northern California town are shutting down, laying off a total of more than 170 workers.
The closures inside the 3-year-old Amazon Orland Delivery Station reflect broader tensions between the tech giant and the business owners and drivers responsible for getting its packages to porches and doorsteps around the world.
Beacon Logistics notified the California Employment Development Department on June 11 that it would be ceasing operations at Amazon Orland facility, laying off 91 employees, according to public records. The other company, Dave’s California Logistics, LLC, gave notice on July 26, signaling 80 layoffs of its own.
Both were part of the Amazon Delivery Service Partners (DSP) program, which enlists business owners to deliver packages in blue Prime-branded vans, employing drivers wearing Amazon uniforms.
Globally, Amazon says there are now more than 3,500 DSP companies that deliver 20 million packages daily in 19 countries.
Drivers in Orland say changes made by Amazon this year, determined by its automated routing algorithms, overloaded their routes with stops and vans with packages, in many cases making it impossible to finish their allotted deliveries without skipping breaks or putting their safety at risk by literally running to keep up.
The company says designing routes is one of the toughest challenges it faces.
“We continue to invest in route design and technology that accounts for the complexities drivers face on the road, such as the type of delivery location, walking distance, the size and weight of packages, and environmental factors like weather,” said Branden Baribeau, an Amazon spokesperson, in an emailed statement.
One of the delivery company owners in Orland, Dave Koentopf, said Amazon’s changes caused his company to lose money since March, ultimately putting him out of business. He said he repeatedly raised the issue with Amazon, which acknowledged the problems but ultimately didn’t resolve them.
“It has become increasingly clear that Amazon is prioritizing profitability over driver safety and is shifting increased financial burdens onto DSPs,” Koentopf wrote in his letter to Amazon in July, giving notice that he was exiting the program.
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Koentopf added, “I am forced to operate at a loss in order to protect my drivers and maintain compliance. I am not willing to compromise driver safety at any cost and no longer desire to be part of this troubling environment and business model.”
Amazon says safety is its top priority, and a major focus of the more than $8 billion the company has invested in the DSP program over the past five years.
“There is still progress to be made, and driver feedback is at the heart of our continuous improvement mindset as we build safe, simple, and sustainable routes,” Baribeau said.
Although some of the challenges are unique to rural deliveries, it’s not an isolated situation. Some other DSP owners also say changes implemented by Amazon are similarly squeezing their margins and threatening the viability of their businesses.
“Your hand-picked delivery partners are entrepreneurs and problem solvers who overcome challenges every day, but the only reward has been a continued march for tighter controls and changes that make profits more elusive,” wrote the owner of a delivery company in Arizona in a recent post on an internal forum, calling on DSP program director James “Jimmy” Wilson to address the issue.
The friction comes as Amazon looks to lower costs and improve efficiencies. The company missed Wall Street’s sales expectations with second-quarter revenue of nearly $148 billion, but nearly doubled its profits to $13.5 billion, as CEO Andy Jassy outlined plans to further reduce costs to be more competitive on price.
Amazon opened its Orland facility three years ago, in a renovated industrial building at the Orland Airport Industrial Park, next to Haigh Field Airport, southeast of the city limits.
Amazon Prime-branded vans at the Orland Delivery Station. (GeekWire Photo / Todd Bishop)
The 75,000-square foot warehouse, with its vast white roof and parking lot full of Prime vans, stands out in a sea of almond and walnut orchards on the outskirts of this community of 8,200 people, two hours north of Sacramento on Interstate 5.
Locals have grown accustomed to the Amazon parade that begins around 9 a.m. every morning. Lines of Prime vans stream north from the station on Road P, turning east on Highway 32 toward Chico, or west on County Road 200, many of them headed to the freeway to deliver packages across multiple counties in the region.
It was one of Amazon’s first delivery stations in a rural part of the country, moving beyond the urban hubs where the company’s delivery operations got their start.
The goal is to speed up delivery times in more parts of the country to compete with Walmart and other retailers. Amazon is now in the process of expanding one- and two-day delivery more rural areas, challenging the U.S. Postal Service, according to a July 30 Wall Street Journal report.
“Rural America is an underserved frontier for Amazon, and they are moving in,” wrote analysts Michael Levin and Josh Lowitz, founders of Consumer Intelligence Research Partners, who closely track trends among Amazon Prime members as part of their research.
Amazon will rely heavily on its Delivery Service Partners in the process.
All of the more than 170 people losing their jobs at the Orland hub work not for Amazon but for independent companies that contract with Amazon to deliver packages. Most are delivery drivers.
It’s a meaningful loss of jobs for a small agricultural community. But the ultimate impact on the local economy may not be as significant as the numbers suggest.
First, the regional nature of the workforce cushions the blow. The facility draws employees not just from Orland but from the broader Northern Sacramento Valley, including Butte, Tehama, and Colusa counties.
Second, under Amazon’s Delivery Service Partner program, other companies will likely fill the gaps left by the two that are closing. And in the meantime, Amazon says it’s helping laid-off drivers connect with other delivery partners in the region so they can keep delivering packages.
However, some of those drivers say they’re ready to move on, saying the route changes implemented by Amazon this year made their jobs far more difficult than they needed to be.
Two drivers based out of the Orland Delivery Station, speaking on condition of anonymity in separate interviews, said they noticed the number of stops and packages on many routes increase sharply starting early this year.
One driver said the job was relatively easy and even fun before that.
But now, if there was one hiccup — road construction, an uncooperative dog, or any one of the million unexpected obstacles that can pop up during a delivery day — it became impossible to catch up. Sometimes the choice came down to taking a bathroom break or finishing the route.
For example, on one route, the number of stops went from around 100 previously, on average, to as many as 150 based on the new configuration. In rural areas, where drivers cover more ground, even a small number of additional stops can severely impact the length and duration of a route.
An Amazon Prime-branded van passes through Orland on its way to I-5. (GeekWire Photo / Todd Bishop)
“There were more and more stops, more and more spread out, and after a while it just became too much,” one of the drivers said. “It was insane.”
The vans were so full at the start of the day, it was hard to move around in them, the driver said. At the end of the day, some drivers had to return to the station with undelivered packages.
Amazon’s routing algorithms would sometimes send drivers from one side of town to the other and back again, for no apparent reason, instead of delivering to one area all at once.
“It’s kind of crazy how such an easy job can be made so difficult,” the other driver said. “It kind of blows my mind.”
Jacob Horton, a top driver for Dave’s California Logistics in Orland who became a fleet manager for the delivery company, said Amazon’s route algorithms and optimization efforts seemed to continually increase the volume and size of the routes without accounting for the realities on the ground.
If there was “headroom” in the van, the algorithm concluded there was capacity on the route.
Some drivers were able to keep up until stopping for lunch or a 15-minute break. After that, there was no chance. After long days, doing their best to keep up with the pace, drivers would often come back to the station with undelivered packages. It took a physical and psychological toll.
“Day in and day out, that is very demoralizing as a person, when you know you’re good at your job, but you still cannot finish it,” Horton said.
Amazon relies heavily on technology to determine its routes. In a post in November 2023, the company described route design and optimization as “notoriously one of the most difficult problems Amazon needs to solve,” requiring more than 20 machine learning models working together behind the scenes.
“Delivering packages to customers requires as many decision points as there are atoms in the universe, and AI is critical to making this possible,” said Scot Hamilton, Amazon’s Vice President for Last-Mile Delivery Routing and Planning Technology, in the Amazon post at the time.
Inside the Amazon Orland Delivery Station after the morning load. (GeekWire Photo / Todd Bishop)
Hundreds of people work at Amazon’s Orland facility, dubbed WTH1. Some are employed directly by Amazon — sorting, scanning and moving packages through the delivery station, from inbound semis on the west side of the building to delivery trucks under the multi-lane canopy to the north.
Others work for Delivery Service Partners companies operated out of the facility, spending their days in vans delivering packages across multiple counties.
Separately, Amazon also runs a program called Amazon Flex, in which everyday people deliver packages using their own vehicles, part of what’s commonly known as the gig economy.
The delivery station is a no-nonsense facility, with rolling platforms and carts for moving packages, and none of the advanced automation or robotic systems that are now common at Amazon’s larger facilities.
Amazon’s landlord, BRT Enterprises, leases the underlying ground from Glenn County under a rental agreement that was renegotiated at a lower rate prior to Amazon moving in, on the condition that there would be at least 50 jobs located at the facility, according to public records.
Amazon Flex drivers leave the Orland Delivery Station. (GeekWire Photo / Todd Bishop)
Even with the closure of two DSPs, employment at the Amazon station should remain well above the threshold in the lease. Amazon says it employs more than 200 people directly at the facility, not including delivery drivers employed by the DSP companies. But city and county officials are following what’s happening.
“The main driver of the economic benefit for the county is the jobs,” said Scott De Moss, the Glenn County administrative officer, speaking via phone this week.
Because the Orland facility is a delivery station, handling boxes and envelopes with products already packed inside, there’s no California sales tax windfall like there is in communities with an Amazon fulfillment center, where the products are packaged, De Moss explained.
And because the property is just outside of the Orland city limits, in unincorporated Glenn County, Amazon doesn’t pay any taxes directly to the city.
As a kind of consolation prize, Orland City Manager Pete Carr has encouraged the Amazon DSP owners to have their drivers fuel up at gas stations in the city, where sales taxes make up about half of the city’s $6.7 million budget. But there’s no way of accurately tracking how many actually do.
Since opening the Orland Delivery Station, Amazon has engaged with the local community through a variety of volunteer activities and philanthropic initiatives — donating bikes, backpacks, supplies, and funds to local schools, teams and organizations.
Bottles of water donated by Amazon were loaded into a truck in July 2021 by Glenn County Supervisor Grant Carmon, center, and Glenn County Sheriff’s Sergeant Jon Owens for local residents impacted by the drought. (GeekWire Photo / Todd Bishop)
During the most recent drought, Amazon made a big impression when it donated pallets of bottled water that were distributed from the Orland Volunteer Fire Department to area residents whose wells had gone dry.
And yet the Seattle-based company hasn’t established the deeper community ties that many in Orland hoped it would.
For example, when Amazon first arrived in town, some local leaders said they were waiting to see if the company would join the Orland Area Chamber of Commerce, in part as a litmus test for its level of engagement. It hasn’t.
One challenge: there have been three different site leads at Amazon’s Orland facility in three years.
The delivery challenges in Orland illustrate the complicated relationship between Amazon and its delivery partners around the world.
Amazon launched the Delivery Service Partner program in 2018, supplementing and in some cases supplanting UPS, FedEx, the U.S. Postal Service and others.
People unfamiliar with Amazon’s practices are often surprised to learn that third-party companies, not Amazon, employ the drivers who deliver packages in Amazon uniforms. These companies are also responsible for running and maintaining the fleets of blue Amazon Prime-branded vans.
Although these delivery companies are ostensibly independent, they are largely subject to the rates, routes, systems, and processes set by Amazon. They are promised a steady flow of work in return. But their businesses can also live or die on changes in Amazon’s policies and promises.
Former DSP owners have filed a series of lawsuits on various grounds, alleging unfair treatment, false promises about profits, and unlawful termination of their delivery contracts.
In one proposed class action suit, filed in federal court in Seattle in 2022, a Sacramento delivery company called Fli-Lo Falcon, LLC, alleged that Amazon “exercises near complete control” over DSPs — effectively treating them as franchisees without the legal protections that designation would give them.
An Amazon Prime van returns to the Orland Delivery Station. (GeekWire Photo / Todd Bishop)
Amazon won an appeals court ruling in April affirming its right to send that case into arbitration.
A bipartisan group of U.S. senators sent letters to Jassy in January and June asking pointed questions about what they described as “Amazon’s efforts to avoid legal liability for the persistent mistreatment of DSP drivers.”
Led by U.S. Sen. Chris Murphy (D-Conn.), the group of 34 senators had the rare distinction of including both Sen. Bernie Sanders (I-Vt.) and JD Vance (R-Ohio), who has since gone on to become former President Donald Trump’s vice presidential running mate in the current election.
Among other things, they wrote, “Amazon’s use of AI-powered surveillance cameras in delivery vans and its mandate that DSP drivers in the U.S. sign biometric consent forms under threat of job loss further demonstrate the control the company has over individual DSP drivers.”
Brian Huseman, Amazon’s vice president of public policy, explained in a Feb. 9 response to Murphy that the cameras are part of Amazon’s efforts to prioritize safety.
“Nearly all Amazon-branded vehicles are equipped with in-vehicle camera safety technology that has reduced accident rates while protecting driver privacy,” Huseman wrote. “Overall, collision rates among DSP drivers have declined nearly 40% since we incorporated this technology into our branded vehicles — with an 89% reduction in distracted driving and an 83% reduction in speeding events.”
When routes get overloaded, DSP owners can find themselves in a no-win situation.
They’re forced to choose between: 1) paying excessive overtime to allow drivers to finish routes; 2) risking driver safety or health by forcing them to skip breaks or work at an unsafe pace; or 3) taking a hit under Amazon’s financial formulas by having drivers bring packages back undelivered.
Another option is to bring in additional help, people who can jump in and assist drivers when they get overloaded. But this also takes a financial toll, cutting further into the DSP’s already thin margin. And it creates a vicious cycle, effectively teaching the Amazon algorithm that the route can take more packages than one driver can deliver.
In any of these scenarios, the DSP risks operating at a loss.
The cost of vehicle maintenance is another big concern. DSP owners are responsible for running and maintaining the vans operated by their drivers, and rural roads can take a heavy toll on aging fleets.
Amazon has yet to roll out its Rivian electric delivery vehicles to the Orland station, and their suitability for remote routes is an open question.
Dave Koentopf with a copy of Amazon’s Leadership Principles in April 2021, when he was working as an area manager for the company. (GeekWire Photo / Todd Bishop)
All of these were challenges faced by Koentopf, the owner of Dave’s California Logistics, who worked directly for Amazon as an area manager inside the Orland Delivery Station before becoming a Delivery Service Partner owner based out of the facility in early 2022.
Koentopf, 59, is a longtime Northern California resident who was previously a plant manager at Lifetouch in nearby Chico, working for more than 28 years at the school photography company. He lost that job when Lifetouch consolidated operations after its acquisition by Shutterfly.
Things were going relatively well for him as a DSP until March of this year, when the route changes kicked in, overloading his drivers.
In recent months, Koentopf said, he repeatedly voiced his concerns to Amazon about the changes and related safety issues, but he ultimately found himself with no other option but to shut down.
Baribeau, the Amazon spokesperson, said in a statement, “As has always been the case, nothing is more important to us than safety, which is why over the last five years we’ve invested more than $8 billion in state-of-the-art technology, safety enhancements, vehicle fleets, and exclusive services for DSPs and their drivers.”
He added, “And, we’re not done; we’re always innovating with new technology, making process improvements, and helping DSPs provide better training to their employees to improve the safety of drivers, customers and the communities we serve.”
Amazon says it doesn’t expect customers to be impacted by the DSP closures in Orland.
Koentopf said this week that he decided to speak out publicly about his experience as a DSP owner as a matter of principle, in the interest of driver safety.
A longtime Amazon customer who describes himself as a fan of the company, he was carrying a copy of Amazon’s leadership principles in his pocket when we first met him on a tour of the Orland Delivery Station three years ago, when he was working for the company.
One of those principles, “Insist on the Highest Standards,” reads in part, “Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.”
Editor’s Note: GeekWire’s Todd Bishop grew up in Orland and volunteers for the local newspaper, the Sacramento Valley Mirror, where a version of this story appeared. He wrote previously about Amazon’s arrival in his hometown, and examined the economics of Amazon’s Delivery Service Partners program after it was introduced.
