Box Size Matters For Shipping Giant UPS
ToUnited Parcel Service ( UPS ), size does matter. On Tuesday, the world's biggest package-delivery company announced that it would start dimensional-weight pricing -- charging based on a package's size as well as its weight.
The new pricing method, which starts Dec. 29, will apply to the company's U.S. ground services as well as its standard service to Canada. UPS already uses this pricing scheme for its domestic and international air shipments.
The Atlanta, Ga.-based package giant's pricing change comes in response to online retailers who ship small items in big boxes, thus wasting precious space in UPS trucks.
"UPS has been researching the potential expansion of dimensional-weight pricing for a number of years because it enables us to more appropriately align rates with costs, which are influenced by both the size and weight of packages," said UPS Executive Vice President and Chief Commercial Officer Alan Gershenhorn in a press release.
RivalFedEx ( FDX ) announced in May that it would start charging by package size on Jan. 1, 2015.
UPS has delivered higher earnings each year since the tough times of 2008 and 2009. Analysts polled by Thomson Reuters see profit rising 11% this year. Bottom-line growth is expected at 15% in 2015.
The company has a long history of raising its shareholder dividend. In February, UPS bumped up its quarterly dividend by a nickel to 67 cents a share. Its dividend has more than tripled since 2000.
UPS pays $2.68 a share on an annualized basis, which works out to a yield of about 2.6%. It offers the highest yield among the three dividend-paying stocks in the Transportation-Air Freight industry group.
Shares of UPS are forming a saucer-with-handle pattern with a 104.40 buy point. Historically, the stock tends to make relatively narrow price swings.