UPS Finally Gets Smart and Cracks Down on Holiday Shippers

[cheryl]

UPS Finally Gets Smart and Cracks Down on Holiday Shippers - Fool.com

After years of struggling to predict shipping demand for the December peak season, UPS is giving retailers a stronger incentive to provide accurate forecasts.

Consumers love being able to order gifts from online retailers like Amazon.com a few days before Christmas and have the parcels show up on their doorsteps in time for the holiday. After all, anything beats braving the crowds at malls in late December!

However, for package-delivery giants United Parcel Service (NYSE:UPS) and FedEx (NYSE:FDX), this trend has led to one nightmare after another. Some years they have been overwhelmed by demand, leading to missed deliveries. Other years, they have had too much capacity relative to the amount of last-minute shipping demand, driving up costs.

UPS is trying a new tactic to avoid these problems in the future. It will reserve the right to charge retailers if they reserve shipping capacity and then fail to meet their e-commerce targets. This will give retailers an incentive to meet (but not exceed) their forecasts.

 

[Operational needs]

Hopefully, FedEx will follow suit.

 

[oldngray]

Shippers refused to set cut off dates and continued to promise delivery by Christmas even if shipped at the last minute so should get penalized for doing so. They might get their panties in a bunch and try to ship everything FedEx or USPS who in no way could handle the extra volume.

I think FedEx will follow along and do the same. USPS may but their attitude is mostly they don't have to care.

 

[UpstateNYUPSer(Ret)]

FedEx is more likely to follow suit than the Post Office.