UPS Plans Hefty Holiday Fees for Large Shippers
August 07 2020 - 10:08AM
Dow Jones News
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)
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