UPS Asking Retailers to Pay Extra When Shipments Miss Forecasts
United Parcel Service Inc. is starting to ask major retailers to help pay for extra workers and surplus space on trucks when a retailer fails to ship as many packages as planned during peak periods, Chief Executive David Abney told The Wall Street Journal. The new charges could also apply if the sizes of boxes retailers shipped are significantly different from what was planned. “If there are variations to the plan, let’s see what we can do, but we should be compensated accordingly,” Abney said. UPS also cautioned that conversations with retailers are just starting and it's still working to finalize how the surge price will be implemented. “We will handle it on a customer-by-customer basis; we will look at our costs and that’s the way we’re going to address it,” Abney said.
Total Retail's Take: While perhaps not welcome by retailers, this news isn't unexpected. UPS, like rival FedEx, is looking for ways to recoup the billions it's investing to add capacity to its network to handle the surge in online shopping. It's hopeful that its retail partners will be able to offset some of those costs. After all, the new policy isn’t meant to be punitive, according to UPS, but one element of broader negotiations with retailers over pricing during peak times as the volume of e-commerce sales and deliveries increases.