Western Railroad Discussion > UPS to add fees for holiday shippers

UPS has announced it will add additional fees for large shippers to handle the additional complexity of the 2020 Holiday rush.  $3 for ground (rail?) and $4 for air bound to residences.  Other carriers are known to be considering increases.  As far as I know, the major railroads have not yet announced fees or surcharges for UPS Amazon WalMart Target etc shipments.

With personal travel likely to be lower this holiday season, fewer people expected to go to Grandma's house, etc, shipping gifts purchased online may be a much larger component. The anticipated cuts to US Postal Service capacity won't help address the situation.

I thought there are economies of scale.  They must have an internal graph showing two curves intersecting at the optimal price/volume levels which shows that they need to add this surcharge or else they will go out of business.  Like "fuel surcharges".

These are simply "we need to make more money" and rather than raising the tariff they add so called surcharges for everything.  I never understood the fuel surcharge. You pay to ship something, but shouldn't that include the fuel to move it?  Package delivery in the USA is such a racket.  We have a lot of our handcar components made in China, and it is cheaper to have a 75 pound box of machined parts air freighted to our home in California from China than it is to ship the same box UPS ground from New York to California. Full disclosure since the pandemic air freight from Asia is twice the cost now account of fewer airliners making the journey.

UPS is far from hurting:

• UPS gross profit for the quarter ending June 30, 2020 was $20.459B, a 49.14% increase year-over-year.
• UPS gross profit for the twelve months ending June 30, 2020 was $63.908B, a 17.81% increase year-over-year.
• UPS annual gross profit for 2019 was $56.377B, a 5.79% increase from 2018.
• UPS annual gross profit for 2018 was $53.293B, a 5.33% increase from 2017.
• UPS annual gross profit for 2017 was $50.598B, a 5.19% increase from 2016.

If the railroads can add a surcharge they will, but they risk losing more intermodal to truck.  They don't exactly monopolize the intermodal industry so they have to be careful not to drive these customers away.
 

Todd Clark
Canyon Country, CA
Trainorders.com

UPS can charge what they want because their competitors are struggling.  Recently, it took Fedex four days to deliver a package after it arrive at the depot in the same city.  Tracking kept reporting it "out for delivery."

I don't know what the big deal is, simply STOP buying online. Support your local stores, leave your house and actually shop locally. Many stores, IF you order through the store's website and have the item delivered to the store, offer free shipping. Cut UPS off at the pockets by not using them. I practice what I preach and virtually never purchase anything online, and if I do I have things shipped to the store if necessary. Just my opinion. 

Thank you Todd, for the data.
Retaining customers and acting like a responsible public utility are just PR department happy talk.
It is all about driving up the share price.
Capital gains have a low tax rate, our collective political wisdom has been to set up capital gains as the easiest way to get rich quick.
All the essays on PSR for railroads, customer and supply chain engagement, being responsive to shipper's needs, that I read make my eyes glaze over.
Everything is about the share price and keeping the stock analysts happy for one more quarter.

Sure buying at the local brick and mortar is a good idea but they will be using UPS or Fed Ex to get it to their front door.

And they will most likely have to eat the increased shipping cost to compete with the big box outfits.

Railbaron Wrote:
-------------------------------------------------------
> I don't know what the big deal is, simply STOP
> buying online. Support your local stores, leave
> your house and actually shop locally. Many
> stores, IF you order through the store's website
> and have the item delivered to the store, offer
> free shipping. Cut UPS off at the pockets by not
> using them. I practice what I preach and virtually
> never purchase anything online, and if I do I have
> things shipped to the store if necessary. Just my
> opinion. 

You do know that UPS probably delivered the items to the store so you could buy them, right?
So they're still getting their piece of the action.

Now buying the local store to keep them in business? That's a different subject.

Fun fact -
Commercial shippers get better service than residential customers. Especially with UPS.

PHall Wrote:
-------------------------------------------------------
> Railbaron Wrote:
> --------------------------------------------------
> -----
> > I don't know what the big deal is, simply STOP
> > buying online. Support your local stores, leave
> > your house and actually shop locally. Many
> > stores, IF you order through the store's
> website
> > and have the item delivered to the store, offer
> > free shipping. Cut UPS off at the pockets by
> not
> > using them. I practice what I preach and
> virtually
> > never purchase anything online, and if I do I
> have
> > things shipped to the store if necessary. Just
> my
> > opinion. 
>
> You do know that UPS probably delivered the items
> to the store so you could buy them, right?
> So they're still getting their piece of the
> action.
>
> Now buying the local store to keep them in
> business? That's a different subject.

Wrong, mostly.  Most freight to stores is delivered by LTL carriers, or dedicated trucking firms that serve that store chain.  ACE HDWE has their own trucks, for example.  RailBaron is right with regards to most items you can order from a store's on-line inventory, in-store.

Regarding the package carriers, it is a racket.  The USPS should be going after this market even more.  As for me, I try to buy locally in store, and if I have to get a shipment, I do whatever possible to avoid FED EX GROUND.  They're horrible.  And I've spoken with several of their drivers who tell me how crazy their operations are.

Coach
LTL driver



Edited 1 time(s). Last edit at 08/07/20 10:33 by coach.

USPS is getting the short end of the stick. Resources are being limited, staff shortages, old equipment, and service cut backs. The postal unions have been talking about this for months.

Posted from Android

FWIW, The new CEO of UPS said she's bringing PSR to the company.

  https://www.supplychaindive.com/news/UPS-capacity-peak-pandemic-coronavirus-tome/582612/ 

"On the call, Tomé's "better, not bigger" strategy drew comparisons to the precision-scheduled railroading (PSR) operating philosophy that nearly all U.S. Class I railroads have adopted in the last few years."PSR for UPS is the name of the game," she said. "We are all in."

I see a business opportunity for smaller carriers, who may “cherry pick” (with lower rates and better service) certain geographic areas and service lanes that UPS and FedEx take for granted. Intra-State carriers like Golden State Overnight might be an option for California shippers.

Posted from iPhone

suvart Wrote:
-------------------------------------------------------
> FWIW, The new CEO of UPS said she's bringing PSR
> to the company.
>
>   https://www.supplychaindive.com/news/UPS-capac
> ity-peak-pandemic-coronavirus-tome/582612/ 
>
> "On the call, Tomé's "better, not bigger"
> strategy drew comparisons to the
> precision-scheduled railroading (PSR) operating
> philosophy that nearly all U.S. Class I railroads
> have adopted in the last few years."PSR for UPS is
> the name of the game," she said. "We are all in."

Live in Bovill ID? Whenever there is enough in a truck to make the trip worthwhile to us, it'll come...and be on time...whenever it makes it to you. (I have had UPS shipments identified that way in the tracker and email messages...Your shipment has been rescheduled and is on time.

TAW

As consumers I guess we will know learn how PSR feels as a customer when our packages start  arriving "on time when the carrier decides to deliver it," if they decide to continue to offer service. 


For me since the pandemic began what use to be 2 day delivery from Amazon Prime via UPS or USPS has gone out the window and can take up to 10 days. No partial refund or credit on membership either. No Amazon delivery trucks in my area.  

Darn little freight percent wise to local stores arrive via UPS or Fed X.

Sure a lot of stores with little/light stuff like hobby shops get a lot via these shippers.  But no the big stores.

As to USPS, a prioity pack, took longer to go from  Riverside to Los Alamitos CA, then to Little Rock.  ARK.  The Los Angeles processing facilites for local cites, seems to be the problem over several years.

Why wouldn’t UPS charge a premium for that time of the year?

They get slammed, have to hire more people, rent more equipment, and pay overtime. It just gets worse (or better depending on your point of view) each year.

Posted from iPhone

I spent 10K to 20K a year in shipping costs.   UPS, Fedex, they are all awful. Hardly a wonder that Amazon wants to have their own delivery service.   They are all constantly looking for ways to raise the rates, without raising the official book rates.   Scam central.   I have a new sales rep every 6 months.  That kind of turnover tells you how wonderful these companies are to work for.

I hope Amazon eventually decides to go into the package carrier biz.  Anything to shake up the current 2 big guys who think they can do whatever they want...

Right now Im using Fedex cause its the lesser of the evils.  At least they have an incentives program.   The post office is the best for pkgs under about 5 lbs/1 cubic foot.
Letter carries can handle the small boxes.

In my neck of the woods,, FEDX has a deal with USPS where FEDEX delivers small packages and envelopes to the Post Office and they handle the delivery to the POBox or letter carrier.
RB