UPS Asks Retailers to Pitch In

United Parcel Service Inc., UPS +0.08% the world’s largest delivery company, is pushing back against major retailers who order up capacity for vast numbers of packages during the holidays but don’t meet their forecasts.

With the retail world in upheaval, UPS is asking retailers to help pay when the extra space and workers aren’t put to use—or even when the boxes don’t match the sizes that retailers promised earlier in the year.

“If there are variations to the plan, let’s see what we can do, but we should be compensated accordingly,” said UPS Chief Executive David Abney in an interview. He said the charge isn’t meant to be punitive but one element of a broader negotiation with retailers over pricing during peak times.


UPS, like rival FedEx Corp. FDX +0.12% , is grappling with the e-commerce boom, which is resulting in more business but rising costs to pick up, sort and deliver packages. The difficulties increase during the peak holiday season, when a greater percentage of deliveries are to homes and apartment buildings, which cost more for UPS to fulfill than to business addresses.

Both companies are looking for ways to recoup the billions they are investing to add capacity to their networks to handle the surge in online shopping. FedEx says it has dropped some retailers that refused recent price increases, and UPS has raised prices and invested in new routing systems and bigger storage facilities.”


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