UPS, the world's biggest package delivery courier, is the first major industry player to announce this year's holiday surcharges, unveiling hefty hikes that analysts say could backfire, Reuters reports.
The 2024 peak gift delivery season from Thanksgiving to Christmas Eve has just 17 operating days, versus the usual 20 or more days. That time crunch could push daily peak season volume to record highs, costing ups extra for trucks, planes and staff to deliver holiday gifts on schedule, the company said.
UPS is hiking fees to boost revenue which has fallen after online budget retailers Temu and Shein made low-margin, slower deliveries a bigger percentage of the Atlanta-based company's business.
Wall Street analysts and industry consultants doubt that seasonal demand will be strong enough to support UPS's hikes and said customers could go elsewhere.
'UPS is trying to will a better pricing market into existence,' said delivery pricing consultant Nate Skiver, founder of LPF Spend Management.'We were surprised by the magnitude,' Wolfe Research analyst Scott Group said of the surcharges announced on July 23.
For the first time, UPS will levy a peak surcharge for commercial air shipments of items including Covid vaccines, which are in demand ahead of year-end gatherings, to free up cargo space and generate revenue.
Said UPS chief executive Carol Tome: 'We think that the prices are going to stick because of what the environment is telling us from a demand perspective.'
Among rivals, FedEx typically matches UPS's seasonal shipping surcharges, but has yet to announce its holiday strategy. The US Postal Service has lots of excess capacity and any surcharge would not be more than 25 cents per package.
SeaNews Turkey
The 2024 peak gift delivery season from Thanksgiving to Christmas Eve has just 17 operating days, versus the usual 20 or more days. That time crunch could push daily peak season volume to record highs, costing ups extra for trucks, planes and staff to deliver holiday gifts on schedule, the company said.
UPS is hiking fees to boost revenue which has fallen after online budget retailers Temu and Shein made low-margin, slower deliveries a bigger percentage of the Atlanta-based company's business.
Wall Street analysts and industry consultants doubt that seasonal demand will be strong enough to support UPS's hikes and said customers could go elsewhere.
'UPS is trying to will a better pricing market into existence,' said delivery pricing consultant Nate Skiver, founder of LPF Spend Management.'We were surprised by the magnitude,' Wolfe Research analyst Scott Group said of the surcharges announced on July 23.
For the first time, UPS will levy a peak surcharge for commercial air shipments of items including Covid vaccines, which are in demand ahead of year-end gatherings, to free up cargo space and generate revenue.
Said UPS chief executive Carol Tome: 'We think that the prices are going to stick because of what the environment is telling us from a demand perspective.'
Among rivals, FedEx typically matches UPS's seasonal shipping surcharges, but has yet to announce its holiday strategy. The US Postal Service has lots of excess capacity and any surcharge would not be more than 25 cents per package.
SeaNews Turkey
