As consumers begin filling their online shopping carts with holiday items, UPS is gearing up for another busy peak season and announced on Friday, August 16th that no surcharges will be added to residential deliveries this holiday season.
UPS Inc (NYSE: UPS) Chairman and CEO David Abney said, "We delivered a record-setting 2018 peak season in terms of both on-time delivery performance and operations execution. We will build on the lessons learned last year and leverage our new efficient air and ground capacity to make the 2019 peak season another success for customers, investors and other stakeholders."
However, in the 2018 peak season, UPS applied surcharges between $0.28 and $0.99 on residential packages, while competitor FedEx Corporation (NYSE: FDX) did not. Due to the ease of online shopping during peak season, UPS delivered between 700 and 800 million packages, which caused a tangible workload increase for the carrier. So it's clear why UPS added the surcharge in 2017.
One way UPS may be compensating for this move in 2019 is by maintaining surcharges for packages that are either too large, unusually shaped or require special handling. Matthew White at iDrive Logistics said, "This shift largely targets packages that are either unattractive from a UPS cost basis or shouldn't be in the network (over-maximum)." While FedEx has not commented on its surcharges for 2019 peak season, UPS seems to be taking notes from FedEx's tactic from 2018.
Eliminating the residential fee reveals UPS' comfort level and ability to better engineer its network. In the last year, UPS added 20 new 747-8 and 767 aircraft and updated its automation, processing and delivery facilities as part of a capital investment plan.
With confidence in its future and financial intelligence, UPS seems to have navigated around the surcharges for the benefit of the average consumer, and from the consumer's perspective, the news comes as an early holiday-shopping boon.
Image Sourced from Pixabay
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