Commentary

Raise Prices, It's A Holiday

United Parcel Service Inc. is counting on a big boost in shipping capacity to avoid logjams in its network during the peak holiday shipping season, and the delivery giant is raising prices to help offset those investments. The Atlanta-based company is planning to deliver 800 million packages in the U.S. between Thanksgiving and Christmas, up from 750 million last year. Nearly every delivery day during that stretch will see volume of more than 30 million packages.

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To handle the surge in packages driven by online shoppers, UPS is building more automated sorting hubs, including its third-largest U.S. facility, which just opened in Atlanta. UPS says it has added seven times more processing and sorting capacity this year than it did in 2017. To offset those costs, says the report, UPS is pushing up prices on domestic deliveries and adding surcharges on oversize packages. In the U.S, business revenue per piece rose 4.8% in the third quarter, the fastest growth since 2011.

UPS also is working closely with more of its largest shipping customers, like Amazon.com Inc. on better forecasting demand during the period, including predicting volume based on where an item shipped from and coordinating with shippers when they have promotions. The plans are aimed at avoiding unexpected volume surges that have caused delivery delays in the past.UPS operating chief, Jim Barber, said of performance in recent years, “The last couple (of years) we’ve been constructively dissatisfied. (Our) goal is to have this peak be the peak we all want it to be, through the eyes of our customers.”

 

 

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