DALLAS (AP) – UPS might levy surcharges or even turn away some holiday shipments this year if retailers surprise the delivery giant by dropping off more packages than they had planned.
UPS executives discussed the possibilities Friday as they detailed plans for improving on last holiday season, when many consumers didn’t get their packages by Christmas as promised.
Online shopping is growing faster than the store-based kind. That’s good for United Parcel Service Inc and FedEx Corp, and on Friday, UPS predicted that December shipments will rise 11 percent over the same month last year.
Atlanta-based UPS offered the forecast while reporting that third-quarter net income rose 11 per cent to $1.21 billion, or $1.32 per share, beating Wall Street expectations of $1.28 per share. Revenue was $14.29 billion, topping analysts’ forecast of $14.20 billion, according to FactSet.
In afternoon trading, UPS shares rose 25 cents to $100.73.
The delivery companies have learned that with the opportunity presented by online shopping, there are also challenges. Last year, a surge in late orders overwhelmed them and resulted in an estimated two million express packages missing their Christmas Eve delivery deadlines. About 1.3 million of those were UPS packages, according to tracking-software firm ShipMatrix Inc, which said the retailers were at fault about 70 percent of the time for overpromising on last-minute guaranteed deliveries.
UPS has spent the year bulking up facilities and technology, and talking to retailers to better predict shipping volumes this holiday season.
On Friday, the president of US operations for UPS, Myron Gray, said that if retailers exceed their shipping quotas, UPS might “mute what they are giving to us”. The company’s chief commercial officer, Alan Gershenhorn, said there could be surcharges.