United Parcel Service
UPS and Fedex both reported better-than-expected quarterly earnings recently, with UPS topping Wall Street expectations with Q2 earnings per share (EPS) of $2.13 and revenues of $20.46 billion, while FedEx reported a Q4 EPS beat of $2.53 and revenues of $17.36 billion, but saw some business decline in May due to coronavirus related closures. Despite the earnings beat, the growing global shipping and delivery demand has strained the companies. This increased demand has caused UPS to up the shipping price for packages from China and Hong Kong, as well as residential ground shipping. Fedex will also be adding similar charges to their shipping prices.
UPS will also be applying surge-charges of up to $4 per package for shippers who send over 25,000 per week, that also have a peak-season volume that is triple February's level. For international and general shipping, packages sent from China and Hong Kong will be double their previous rate, now $2 per pound per package, and from Taiwan it will now be $1, jumping from its previous $0.22. FedEx has also announced it will be applying these holiday-type charges.
The two said the surge-charges will be applied in areas affected by coronavirus to help cover costs of busy-season recruitment and training, as well as ensuring faster delivery, according to inside information from The Wall Street Journal.
Due to both the coronavirus pandemic and popularity of online shopping, these surge-charges and higher prices won't just be hurting the everyday consumer, but also the companies that are struggling, such as retailers and independent small businesses, according to John Haber, CEO of package consulting firm Spend Management Experts, in BNN Bloomberg.
Many companies have turned strictly to e-commerce to combat losses during the pandemic, and those will be the ones to feel these changes, with their consumers feeling it as well. It is very likely that the only companies that will be able to swallow these new fees and prices without the consumers seeing it will be mega corporations like Amazon