UPS and Oil

Fnix

Well-Known Member
What will UPS do when oil prices are too high to make it a profitable business? Surely not every vehicle will be efficient. How long do you think UPS can last?
 

rod

Retired 21 years
What will UPS do when oil prices are too high to make it a profitable business? Surely not every vehicle will be efficient. How long do you think UPS can last?


As long as the customers are willing to pay the fuel surcharges. UPS passes their fuel costs on to their customers.
 

scratch

Least Best Moderator
Staff member
Fedex, DHL, and the USPS use oil too. Those Fedex Ground folks will be hit most. I don't know if Fedex helps their "contractors" with diesel fuel.
 

j4ck4zz

Active Member
The fuel surcharge on shipments will increase to offset the higher fuel prices.
This will probably mean that QVC will have to increase their shipping costs to customers, but we all know that those QVC addicts will still be ordering.
 

scratch

Least Best Moderator
Staff member
Maybe QVC and HSN will start putting the complete order in one box instead of shipping six of the same size parcels to the same address.
 
G

Get the big picture

Guest
Fedex Ground "contractors" get a supplement on fuel. $1.25 per gal. is the benchmark. Every 10 cent move in fuel over $1.25 they get 1 cent per mile. So at todays diesel fuel cost of $4.25 per gal. they are getting fuel supplement of 30 cents per mile. Without it the contractors would throw the towel in!!
 

browniehound

Well-Known Member
As long as the customers are willing to pay the fuel surcharges. UPS passes their fuel costs on to their customers.


True Rod,
But when does the point come that we stop ordering from Amazon, Zappos, HSN, QVS, Drugstore. etc? I am at that point now. I live 2 miles from a large shopping mall and can't fathom paying 10-15 bucks on shipping costs that takes me 30 minutes to get at the local mall.

How long until other people realize this? Our routes have mushroomed in residential stops over the last 7 years due to online shoppers. Will it continue?
 

dilligaf

IN VINO VERITAS
How long until other people realize this? Our routes have mushroomed in residential stops over the last 7 years due to online shoppers. Will it continue?

As long as we have senior citizens who can't or won't drive it will continue. Even though they are generally on a fixed income they will generally make accomadations in their income to purchase extras.
 

barnyard

KTM rider
As fuel prices go up, so do surcharges. It also changes the way that people think about the way they shop.

I race dirtbikes. During race season, my daughter and I usually do 1-2 trips to our dealer per month. It's about a 75 mile round trip. They ship daily and for orders over $100, shipping is free.

This past weekend, my daughter and I went through our bikes and made a list of the crap we need and I ordered it. It'll be here tomorrow. I spent more than $100, so shipping was free. Way cheaper than driving.

On Sunday, we went trail riding and talked about this amongst the group. Seems to be a common strategy.

Small businesses on my route are trying to figure out how they can inexpensively sell online. If they can figure it out, they will become daily pick up accounts.

If anything, I'd bet that the threshold for free shipping will go up (maybe $250 instead of $100.)

TB
 

satellitedriver

Moderator
True Rod,
But when does the point come that we stop ordering from Amazon, Zappos, HSN, QVS, Drugstore. etc? I am at that point now. I live 2 miles from a large shopping mall and can't fathom paying 10-15 bucks on shipping costs that takes me 30 minutes to get at the local mall.

How long until other people realize this? Our routes have mushroomed in residential stops over the last 7 years due to online shoppers. Will it continue?
My customers live 50 miles from the nearest "big" city. Big defined as a city with a population of over 50,000.
In this county the largest city is 6,300.
Online shopping will increase in the rural areas, but what effect it will have on UPS profits is up for grabs.
We might(and I think should) go back to the rural remote system in rural areas.
It could be a "green" campaign ,for UPS.
I waste a lot of fuel/miles and time going to three resi rural's every day. Only one of the three get something daily, but it is everyday.
I get the "Big Picture" on promised service, but when someone choses to live in the woods 20 miles from the nearest crossroad, they should not expect the same service as if they lived in downtown Dallas.
I live 20 miles from that 6,300 pop. town and I knew what concessions I had to make for my lifestyle.
The rural's are the reason for my route, but, there is a more efficient way to provide service and keep our company profitable.
 

Cementups

Box Monkey
My new P7 has a mileage computer in it. On the stopp and go I get about 4 MPG and on the highway about 7 MPG. How's that for efficiency?
 

outta hours

Well-Known Member
I get the "Big Picture" on promised service, but when someone choses to live in the woods 20 miles from the nearest crossroad, they should not expect the same service as if they lived in downtown Dallas.

Have to disagree with you on this one sat. My customers are also 50 miles from the big city, and they pay a rural surcharge that UPS adds to their shipping bill for anything going to this zip code. So they are paying more than someone in Dallas to have a pkg. delivered. I had my fill of the "deferred" plan also. The one that suffered was the customer and our reputation. I have a guy that runs his business out of his house. And he is way out in the sticks. He has a daily pickup account and I pickup 10-20 EAM pkgs. and letters a day from him. Fedex could not even find him and that's how we got the account. We both know it's different out in the country. It's just the cost of doing business, and believe me if UPS was losing a bunch of money on our routes things would change quickly.
 

soberups

Pees in the brown Koolaid
UPS gains a competitive advantage when fuel gets more expensive. We enjoy economies of scale that our competition lacks; in terms of packages delivered per gallon of fuel used, we have a huge advantage over the smller carriers.
 

satellitedriver

Moderator
Have to disagree with you on this one sat. My customers are also 50 miles from the big city, and they pay a rural surcharge that UPS adds to their shipping bill for anything going to this zip code. So they are paying more than someone in Dallas to have a pkg. delivered. I had my fill of the "deferred" plan also. The one that suffered was the customer and our reputation. I have a guy that runs his business out of his house. And he is way out in the sticks. He has a daily pickup account and I pickup 10-20 EAM pkgs. and letters a day from him. Fedex could not even find him and that's how we got the account. We both know it's different out in the country. It's just the cost of doing business, and believe me if UPS was losing a bunch of money on our routes things would change quickly.
The rural remote decisions where made at the driver level.
I had home business's in remote areas and always took care to meet their needs. If they were a P/U, all bets are off on rural remote.
Having said that, the lady that ordered the new butterfly catcher from QVC that lives 20 miles out can wait 1 to 2 days, since she gets at least 1 QVC a day.
The surcharge here is $1 and it doesn't even come close to cover the extra cost rise in the price of 1 gallon of gasoline.
 

filthpig

Well-Known Member
We may see a periodic dip in online shopping, but it won't be due to our rates. It will be due to people having to cut back and not shopping, period. Companies like UPS aren't going anywhere. The economy cannot operate without them.
 

brownmonster

Man of Great Wisdom
What UPS needs to do is adopt a computerized dispatch system that maximizes effeciency and saves fuel. Then actually implement it correctly.
 
What will UPS do when oil prices are too high to make it a profitable business? Surely not every vehicle will be efficient. How long do you think UPS can last?

They will just continue to surcharge the crap out of customers. There has been a fuel surcharge in effect for years that gets adjusted every month depending on what the cost of fuel is. There is also the $1 charge for residential deliveries. UPS doesn't seem too worried about it as long as the customers continue to pay the surcharges. Although they have a small fleet of natural gas vehicles (which I think is more for publicity than for actually saving fuel), if they were really concerned about fuel costs they would put more effort into the alternatives (bicycles, natural gas, etc).
 

dilligaf

IN VINO VERITAS
Take a 1$ surcharge on every pkg in one condensed neighborhood. Lets say there are 20 stops and 25 pkgs. That's 25$ for an area that took 45 min to del. Now multiply that by the number of neighborhoods across the country that are condensed (lord only knows how many that is). That is a fair chunk of change. I don't think UPS is suffering to much. LOL
 
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