UPS to levy holiday surcharges to battle e-commerce costs


UPDATE 1-UPS to levy holiday surcharges to battle e-commerce costs

(Adds details of surcharges, background, context, company
comment, stock price)
    By Nick CareyDETROIT, June 19 (Reuters) - United Parcel Service Inc
<UPS.N> said on Monday it will levy surcharges on U.S.
residential packages during its crucial peak holiday season this
year as it seeks to combat the spiraling costs of delivering
e-commerce packages.
    Like its main rival FedEx Corp <FDX.N>, UPS has struggled
with the expense of "the last mile" associated with delivering
to residential addresses. The cost per package to businesses is
typically lower because they receive more deliveries.
    Atlanta-based UPS, the world's largest shipping company,
said residential packages, large packages and those exceeding
system weight limits would face surcharges of up to 97 cents for
two-day air services to residential addresses from Dec. 17-23.
    A 27 cent surcharge per package will apply to UPS' ground
service from Nov. 19 to Dec. 2 and between Dec. 17 and Dec. 23.
    "We're focused on helping our customers achieve success
during some of their most important selling seasons," Alan
Gershenhorn, UPS' chief commercial officer, said in a statement.
    UPS's average daily volume exceeded 30 million packages on
some days during its 2016 peak holiday season, far above its
normal daily average of more than 19 million packages.
    To meet that demand, UPS said it "acquires on a temporary
basis and often at shorter-term premium rates, additional air
and truck cargo capacity, temporary facilities, and additional
sorting and delivery personnel."
    UPS has worked closely with retailers to manage the peak
season surge since struggling to do so in 2013 and 2014.
    Both UPS and FedEx have spent billions of dollars in
upgrading their networks to handle rapidly rising e-commerce
package volumes, leaving investors chafing over the expense.
    It is unclear whether Memphis-based FedEx, which is due to
report quarterly results after the close of trading on Tuesday,
plans to adopt a similar peak season surcharge policy.
    Cutting delivery costs is a key priority in the e-commerce
sector and was, according to industry experts, one of the
reasons for Amazon Inc's <AMZN.O> announcement last week that it
was buying Whole Foods Market Inc <WFM.O> for $13.7 billion.
    UPS shares were down 6 cents at $110.53 in late morning
trading on Monday. FedEx was down 74 cents at $209.76 a share.

 (Additional reporting by Ankit Ajmera in Bengaluru; Edited by
Martina D'Couto and Paul Simao)
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This article appears in: Stocks , World Markets , Politics
Referenced Symbols: AMZN , FDX , UPS , WFM

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