Amazon (AMZN) is pausing part of its logistics plan by halting the transfer of delivery vans between partner companies after complaints over steep repair bills. The move highlights rising problems inside Amazon’s delivery network, which handles millions of packages each day.
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Amazon Responds to Partner Complaints
Amazon works with more than 2,400 small delivery firms, known as delivery service partners (DSPs). These firms don’t own the vans. Instead, they rent or lease Amazon-branded vehicles from a fleet manager chosen by the company and use them to deliver packages. When vans are reassigned to another DSP, the original operator must cover the repair costs before the transfer.
Recently, owners complained that Amazon’s PAVE app, used to estimate van repair costs, often gave wrong numbers, causing the final bills to jump to $50,000 or more instead of just a few thousand. Some DSPs said the huge costs left them with heavy losses or even forced them out of business.
The company admitted to errors in the repair process and said it will refund partners where charges were wrong. It also promised a 20% discount on repairs for now and said van redeployments will not restart until next year.
What It Means for Amazon
Amazon started the DSP program in 2018 to lower its reliance on (FDX), UPS (UPS), and the U.S. Postal Service. Today, the program is a key part of how Amazon delivers millions of packages each day. The pause shows that problems in the system can create risks not only for partners but also for Amazon’s wider delivery network.
For now, the pause may not hurt Amazon’s earnings. But if partner tensions keep rising, it could weigh on delivery speed and costs — two areas that are key to keeping Amazon’s edge in e-commerce.
Is AMZN a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 44 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $264.13 per share implies 16.88% upside potential.
