UPS has announced what can be seen as a monumental change to their holiday pricing:
No residential peak surcharges will be applied during the 2019 holiday shopping season. (except when contractually required).
In the press release accompanying the announcement, UPS Chairman and CEO David Abney stated:
“This announcement enables UPS customers to plan now for a great holiday shopping season and to satisfy their customers by utilizing UPS’s industry-leading on-time delivery service, once again this year.”
Leveraging Greater Capacity and Efficiency
UPS has made strident efforts over the last few years – and particularly in the last 12 months – to increase their capacity for shipment and achieve greater efficiencies through automation and investment in smart technologies.
Some of these efforts include:
- 20 Additional 747 and 767 aircrafts
- 700,000 additional packages per hour of automated sorting in Super Hubs
- Updated processing and delivery facilities
With the company’s continued upgrades, it is projected that 75% of packages this holiday season will be sorted by one of their new automated facilities.
In addition, UPS recently announced it will be launching Sunday deliveries, which followed competing carrier FedEx who made a similar announcement prior.
What This Means for the Industry
As it stands now, UPS is the only major carrier to have made this announcement. However, it seems that carriers are in a bit of a race to the bottom lately – for example, UPS announced Sunday deliveries only a few weeks after FedEx made the same announcement.
It would not be surprising if we saw other carriers make similar announcements in the run-up to the holiday season.
Amazon Still Looms
Any machination within the carrier space these days must be looked at with an understanding that Amazon is looming in the background. That’s because, especially as of late, Amazon’s once silent battle with traditional carriers has become more public.
Recently FedEx, one of Amazon’s main shipping partners, decided to completely end its relationship with the company. This, in effect, has put Amazon on a fast track to becoming a carrier in and of itself.
UPS has also been in the fray in the form of a recent court case brought by the company against rival USPS. While not the direct target of the case, Amazon was in the crosshairs by proxy – they are USPS’ biggest customer. The case essentially challenged the idea that USPS was setting its prices that maintained a level playing field.
Those artificially low costs were then passed on to Amazon, who benefitted greatly.