UPS Adds Peak Delivery Surcharge to Manage E-Commerce Demand Amid Coronavirus
As a surge of shipments hit the United Parcel Service Inc. this summer, the company is utilizing “peak” surcharges for companies that have overwhelmed its delivery services with large quantities of orders and oversized shipments amidst the coronavirus pandemic, according to the Wall Street Journal. While extra fees are expected during times like the holiday season, UPS’s move to add surcharges starting May 31 is a first in e-commerce history. The fees won’t be affecting the average shopper, but retail giants, such as Amazon.com Inc., Target Corp., and Best Buy Co. As major retailers transition to online platforms to boost sales, the companies will face higher prices for shipping. UPS is not alone in struggling with online sales surges, as other companies, like FedEx Corp. and the U.S. Postal Service, have been flooded with delivery orders over the past 2.5 months. Specifically, at Target and Best Buy, online sales have more than doubled this quarter. UPS’s most profitable deliveries, bulk packages for offices, and non-essential companies, have decreased significantly, and now the company delivers 70 percent of its packages to residential homes (unlike Fall’s 54 percent). Once FedEx separated itself from Amazon, UPS picked up the load. International shipments are also subject to surcharges now due to decreased air traffic.
The new surcharges will add 30 cents in price for shippers that exceeded average weekly volume in February (more than 25,000 delivered packages) under UPS Ground and SurePost. Shippers who exceed 500 large packages a week will face a surcharge of $31.45 for each big package.
CEO of supply-chain consulting firm Spend Management Experts, John Haber said, “All of the large e-commerce shippers are going to get hit with this. A lot of them will try to negotiate it out, but there hasn’t been a lot of flexibility about not paying these peak surcharges.”