The explosion of e-commerce has made package delivery companies like UPS and FedEx very profitable, and it has also stretched them to the limit. The most stressful times for the shippers have been around Black Friday and Christmas when a flood of deliveries can cause bottlenecks. To manage the wave of shipments coming in during the holiday season, UPS is plans to add surcharges to customer orders on the busiest days. Paul Ziobro reports:
For UPS, the move signifies a need to get paid for a service that has become an integral cog in the holiday shopping period, when it must add planes, trucks and thousands of staffers.
While Amazon and countless other websites are the front door to millions of products on the web, UPS, FedEx and the U.S. Postal Service do the heavy lifting that eliminates trips to stores and delivers packages to homes.
UPS said it had to impose the charge to offset the additional cost of delivering packages.
The company is “trying to make sure they are, at the margin, getting compensated for stretching their network,” said Sanford C. Bernstein analyst David Vernon, adding that the carriers have the power to raise prices given how critical they have become to the period. “Without them, Christmas kind of doesn’t happen.”
Read more here.
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