By Paul Ziobro 

United Parcel Service Inc. plans to impose hefty fees on large shippers during the holiday season, reflecting the added complexity and cost of an expected crush of online orders amid the coronavirus pandemic.

The fees will test large retailers' ability to offset costs during a holiday season when they will likely be more reliant on online orders amid the lingering effects of the pandemic, with shoppers skittish about crowded stores.

UPS on Friday said the fees could total as much as $3 a package for ground shipments and other lower-priced shipping options and up to $4 a package for air shipments bound for residences.

That is significantly higher than the last time UPS instituted additional fees during a peak holiday season, in 2018. Surcharges then reached 28 cents on ground shipments and up to 99 cents for some air shipments.

The newly planned fees come as UPS as well as rival FedEx Corp. try to offset significantly higher costs from the influx of packages flowing through their network.

They have already imposed additional fees on large shippers, and have raised prices on some customers by double-digit rates.

The new charges come after UPS's new chief executive, Carol Tomé, recently said the company would take a more aggressive approach to raising prices on large retailers to manage capacity.

"While retailers may squawk at price increases that come their way, large retailers have a way to spread that across and nobody knows," Ms. Tomé, who previously served as chief financial officer at Home Depot Inc., said on the company's earnings call last week.

UPS said its surcharges will apply from mid-November until mid-January. They are designed to apply only to customers who ship more than 25,000 packages a week, with the fees rising based on how much higher the weekly shipping volume is compared to the customer's average weekly shipping from volume in February. That month is seen as a baseline because it was before the pandemic upended buying and shipping patterns.

The starting fees are $1 for ground shipments and $2 for air. The company said it will also include surcharges of $5 on shipments that require additional handling and $50 for large items.

A UPS spokesman said the surcharges reflect the available capacity to handle and ship packages.

"These surcharges are designed to balance our network to provide the best possible service for all customers, and have been constructed based on our customers' unique package volume characteristics," the spokesman said.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

 

(END) Dow Jones Newswires

August 07, 2020 09:53 ET (13:53 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Aug 2020 to Sep 2020 Click Here for more United Parcel Service Charts.
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Sep 2019 to Sep 2020 Click Here for more United Parcel Service Charts.