Amazon delivery partners bail out as costs rise

Some Amazon delivery contractors in the US are leaving the company’s delivery service partner (DSP) program, citing rising costs and lower profits.

Operators told that insurance and vehicle maintenance expenses have surged, while Amazon has tightened performance requirements.

The company announced a 20% pay increase to 12 cents per package starting January, but several contractors said it does not offset higher costs.

Amazon launched the DSP program in 2018, with more than 4,400 firms now joining, mostly in the US.

Contractors said inflation and stricter metrics have made it harder to operate profitably, prompting some to exit or consider leaving.

Amazon said 80% of 648 contractors reviewed last year earned at least US$100,000 annually, and that interest in the program remains strong.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

In Texas, one operator saw insurance jump about fivefold to nearly $500,000, per Bloomberg. Later route starts added overtime plus towing, which cut profits from $200,000 to about $75,000 if run solo.
Amazon raised per‑package pay 20% to 12 cents. Rising premiums can swamp gains, with liability up 7.5–20% and physical damage 18–25% 1.
Amazon delivered 6.3 billion packages in 2024, about 25% of U.S. parcel volume, and is on track to pass the United States Postal Service (USPS) by 2028 2 3. Even modest DSP churn could lift Amazon costs or soften peak service. Last mile is the final leg from a local facility to the customer’s door.

Only 30% of commercial fleets share telematics data (vehicle location with driver behavior from onboard devices) with insurers, though 88% use it for safety, leaving DSPs exposed to rising premiums without fixes 4 5.
Startups use telematics‑driven group captives, which are member‑owned insurance pools. They also use AI dashcams, dashboard cameras with AI that can cut fatal crashes 20% and injury crashes 35% 6. Video telematics and predictive maintenance, which uses sensor data to fix vehicles before breakdowns, can trim unplanned downtime up to 30% and repair costs 20% 6.
66% of fleets struggle to interpret telematics data 5. DSPs employ younger drivers per Bloomberg, while nuclear verdicts and settlement creep keep pressure on rates 1.