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UPS plans heavy holiday fees amid coronavirus-related shipment surge

imageCoronavirusAug 07, 2020 08:15PM ET

(C) Reuters. The company logo for United Parcel Service (UPS), is displayed on a screen at the NYSE in New York

(Reuters) – United Parcel Service Inc (NYSE:UPS) plans to impose big fees on large shippers sending significantly more packages through its system during the holiday season amid the coronavirus pandemic, according to a new fee schedule released on Friday.

The novel coronavirus outbreak has disrupted operations at UPS and other large delivery firms – swamping their networks with everything from food to furniture, while putting the brakes on profit-making shipments between businesses.

UPS said the new 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. The hikes were first reported by the Wall Street Journal.

UPS said the surcharges will apply from mid-November until mid-January and are designed to apply only to customers who ship more than 25,000 packages a week.

The charges escalate as customers send 110%, 200% and 300% more shipments than their average weekly shipping volume in February.

“This could be the last we see of free shipping,” said Cathy Morrow Roberson, founder of Logistics Trends & Insights.

She said the price increases are yet another blow to struggling retailers, who have seen store sales plummet during the pandemic. Higher holiday shipping costs could force them absorb the extra fees, stop subsidizing free shipping, or raise prices.

UPS declined to say what percentage of their customers would be affected. (NASDAQ:AMZN), the largest customer of UPS and a rising delivery rival, declined to comment.

UPS and rivals FedEx Corp (NYSE:FDX) and DHL each have taken steps to manage the boom in lower-margin, e-commerce deliveries, which has required them to add labor and secure more space on planes, trucks and trains.

The U.S. Postal Service, which also delivers large numbers of packages, also is grappling with a significant surge in volume.

“They don’t have an infinite amount of capacity,” Morrow Roberson said of U.S. package carriers.

UPS plans heavy holiday fees amid coronavirus-related shipment surge

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