Why United Parcel Service and FedEx Corporation Are Hiking Prices

cheryl

I started this.
Staff member
Why United Parcel Service and FedEx Corporation Are Hiking Prices - Motley Fool

Why prices are going up
The pricing increases will grab the headlines, but in reality they are part of a series of actions both companies have been taking to maximize profitability. In short, FedEx and UPS need to take these measures because they are seeing margin pressure as a result of burgeoning e-commerce delivery growth. That pressure shows up in different ways.
  • The need to expand capacity to deal with increased costs brings about higher operational costs -- at least initially eating into gross profit margins.
  • E-commerce demand during peak season is putting pressure on both companies to have the right capacity in place at the right time -- UPS in particular has had issues with this subject.
  • E-commerce vendors are packaging inefficiently and increasingly shipping large, difficult-to-deliver items, such as trampolines or gym equipment.
 

upschuck

Well-Known Member
Those three bullet points are crap

The first two would make only temporary increases, and the third is already happening. The large package surcharge is in around $70s now, I believe.
 

Catatonic

Nine Lives
One of the possible side benefits will be additional buildings which mean opportunities to drive.
And the addition of more drivers period.
Hopefully cutting down on driver paid day.
Look for UPS concessions in 2018 in this area ... but at what cost?
Maybe tiered pay for drivers?
 

Orion inc.

I like turtles
One of the possible side benefits will be additional buildings which mean opportunities to drive.
And the addition of more drivers period.
Hopefully cutting down on driver paid day.
Look for UPS concessions in 2018 in this area ... but at what cost?
Maybe tiered pay for drivers?

Tiered pay?? Who are you?? Dave??

If ups just gave their corporate board a big raise(they did) and they post another big profit year(they will) concessions won't be on the table. They'll have no leverage to argue for them.
 

Catatonic

Nine Lives
Tiered pay?? Who are you?? Dave??

If ups just gave their corporate board a big raise(they did) and they post another big profit year(they will) concessions won't be on the table. They'll have no leverage to argue for them.
Oh, I thought the drivers might be interested in a lower paid day.
 

Operational needs

Virescit Vulnere Virtus
Tiered pay?? Who are you?? Dave??

If ups just gave their corporate board a big raise(they did) and they post another big profit year(they will) concessions won't be on the table. They'll have no leverage to argue for them.
They'll probably do how Fedex does every time before cutting another benefit. They'll say in order to remain competitive with Fedex, they need to make cuts now, yada, yada, yada. I've heard all the excuses.
 
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