The ongoing COVID pandemic has spiked the online delivery business by many folds as people have preferred to shop online and remain indoors, and so have the shipping charges at United Parcel service.
The shipping company announced on Friday with a memo that it has tacked on an additional surcharge for some packages within the US and other on international parcels. The memo said that the shipping charges, 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 an anticipated increase in deliveries in the upcoming holiday shopping season. The fees will add up to higher costs for retailers and other sellers — which they are free to eighter incur or further pass on to the end receiver.
The memo said “UPS continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of our customers. Our goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.”
The stock of the company was up by 5% on Friday morning. It touched a 52-week high of $153.32, up about 30% so far this year, bringing the company’s market cap to more than $132 billion.
Rival company FedEx has already added surcharges to international shipments of packages and freight from April 6, as per notification on its website.
FedEx said on its website that the increase was“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 transport goods across the globe.
Practicing safe distancing measures, people in the US have taken to online shopping in a big way. As the pandemic is showing no signs of slowing down, online sales are poised for a surge as people prefer to stay at home. Retailers have put their faith in shipping services, such as UPS and FedEx, to get those purchases to customers’ homes. That’s led to a massive surge in delivery services, ranging from furniture and food to even exercise equipment.
The situation can get very aggressive as in the upcoming holiday season people begin to buy gifts for family and friends and if another surge of COVID 19 cases occurs as been predicted.
As per UPS in the quarter ended June 30, its shipments business surged by more than 65 percent with the average daily volumes in the US grew nearly 23% and reached 21.1 million packages per day, the company said. Its quarterly performance beat Wall Street’s expectations and the stock went up by 11 percent.