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Delivery giant asking retailers to help pay for extra costs when shipments miss forecasts

United Parcel Service Inc. wants to get paid for packages it never delivers.

The company is starting to ask major retailers to help pay for extra workers and surplus space on trucks when a retailer fails to ship as many packages as planned during peak periods, UPS executives say.

The new charges could also apply if a retailer’s forecast veers off course in other ways, like if the sizes of boxes shipped are significantly mismatched from what was expected.

A union representing 1,200 U.S. air maintenance workers at United Parcel Service Inc turned up pressure on the company on Sunday to settle a three-year contract dispute, saying it would seek clearance to strike.

The union is taking its grievances directly to UPS shareholders, running as an advertisement an open letter to David Abney, the company’s chief executive officer, ahead of a Thursday shareholders meeting.

The letter, which has been delivered to board members, was signed by nearly 78 percent of members of Local 2727 of the Teamsters union, asking the company to maintain air mechanics’ current health plan and not demand other concessions.

Despite the U.S. economy sputtering a bit in the first quarter, transport giant United Parcel Service (UPS) delivered with its latest results.

The package delivery company reported first quarter earnings of $1.32 a share, beating Wall Street forecasts for $1.29 a share. Total revenue rose 6.2% to $15.3 billion, ahead of estimates for $15.2 billion. Excluding the impact of currency fluctuations, UPS saw sales rise 7.5%. Sales in the U.S. gained 5% on the back of average daily volume growth of 2.6% and higher delivery prices. It helped, too, that UPS continued to benefit from the shift toward online shopping. Meanwhile, international average daily volume rose 12.1%.

E-commerce growth is proving expensive for United Parcel Service Inc. The delivery giant saw strong gains in domestic package volume in the first quarter, but the WSJ’s Paul Ziobro and Joshua Jamerson report that costs are also racing upward as the deliveries grow more expensive to complete and the company builds infrastructure to match changing consumer buying patterns. UPS says shipments to homes, a proxy for e-commerce deliveries, rose about 7% in the first quarter, ahead of the 2.6% volume increase in its U.S. parcel business. Those home deliveries are tougher to serve than the more concentrated and economical business-to-business deliveries. UPS is also building two regional hubs that will rely heavily on automation, taking some of the labor cost out of its distribution channels. It’s not all about cost: UPS saw operating profit at its supply chain and freight division jump nearly 22%, partly from the need driven by e-commerce for companies to store more goods closer to where shoppers live.