UPS tacks on additional fees as it faces a flood of packages during pandemic

Key Points
  • United Parcel Service has added surcharges to high volume shippers during the holiday season.
  • The shipping company has coped with a flood of packages, as some Americans prefer to shop online for food, furniture, exercise equipment and more. The holiday shopping season will add to the crush of shipments.
  • Shares were up about 5% Friday and touched a 52-week high intraday.
In this April 25, 2011 photo, United Parcel Service (UPS) driver Albert Palafox finishes his deliveries in Palo Alto, Calif. (AP Photo)
Paul Sakuma

With the pandemic, the number of packages has spiked — and so have the shipping surcharges at United Parcel Service.

The shipping company said Friday in a memo that it has tacked on additional fees for some packages shipped within the U.S. and others shipped internationally. In the memo, it listed the shipping surcharges, which depend on the item's weight, when it is sent and whether a customer ships a high volume of packages.

The charges, which can be as high as $4 a package for air shipments to residences, are aimed at coping with a potential crush of volume during the upcoming holiday shopping season. The fees will add up to higher costs for retailers and other sellers — which they can absorb or pass on to customers.

"UPS continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of our customers," the memo said. "Our goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services."

Shares of the company were up about 5% Friday morning. They reached a 52-week high of $153.32. They're up about 30% so far this year, bringing UPS' market cap to more than $132 billion.

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UPS' rival, FedEx, has added surcharges to international shipments of packages and freight. Its higher charges began April 6, according to its website. 

FedEx said on its website that it increased fees "due to the various COVID-19 containment restrictions issued in countries around the world." It said the restrictions have made it harder and more expensive to move goods across the globe.

Many Americans have shopped online instead of at stores during the pandemic because of stay-at-home orders or the spread of the coronavirus. Retailers have increasingly relied on shipping services, such as UPS and FedEx, to get those purchases to customers' homes. That's led to a flood of packages, ranging from furniture and food to exercise equipment.

When consumers begin to buy gifts for family and friends later this year, the situation could worsen, especially if the country sees another surge in Covid-19 cases. 

In the quarter ended June 30, UPS said, consumer shipments jumped by more than 65%. Average daily volumes in the United States grew by nearly 23% and reached 21.1 million packages per day, the company said. Its quarterly performance beat Wall Street's expectations and sent shares soaring up about 11%.

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