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UPS to hike charges for major customers

United Parcel Service Inc may charge major customers more for a surge in late, unplanned packages or turn down the business if it threatens disruptions during the peak holiday season, a top executive said at the weekend, trying to avoid a repeat of last year’s delivery meltdown.
UPS and main rival FedEx Corp, both considered U.S. economic bellwethers, are approaching their busiest time. Last year a last-minute surge in online consumer promotions left an estimated 2 million express packages stranded on Christmas Eve.
“If it (a late surge) creates challenges and adds costs we would charge a premium,” Chief Financial Officer Kurt Kuehn told Reuters. “If it puts our service at risk, we would have to deny (the business).”
Kuehn spoke after UPS, the world’s largest package delivery company, posted higher-than-expected third-quarter profit, driven by rising U.S. consumer and business demand plus strong growth in Asia.
Kuehn said UPS remained concerned about U.S. railroad service problems – UPS is a major rail customer – saying “they need to improve their service metrics.” The major railroad have struggled this year to meet demand due to a growing economy, rising oil-by-rail freight and a record harvest.
The problems especially affected UPS, which has invested $500 million to boost its infrastructure to handle the coming holiday season.
Like Memphis-based FedEx, UPS has worked with major retailers this year to get a clearer forecast for package volumes and online promotions to avoid a repeat of last year’s debacle.
FedEx has said if a major retailer decides to offer a last-minute online promotion without notifying the company, which threatens its service, the company won’t be able to handle the business.

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