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United Parcel Service Inc. is adding "peak" surcharges for companies that have been inundating its delivery network with too many packages and oversize items during the coronavirus pandemic, an unprecedented move to manage a summer flood of shipments and higher costs.
UPS typically imposes extra fees on merchants during the busy Christmas shopping season, but — for the first time in the e-commerce era — will add such surcharges starting May 31. The fees would apply to large online sellers like Amazon.com Inc. as well as traditional retailers like Target Corp. and Best Buy Co. that have shifted heavily to e-commerce as many stores have closed temporarily.
Delivery companies like FedEx Corp., UPS and the U.S. Postal Service are struggling with an unexpected increase in online shopping over the past 2 1/2 months as consumers buy online everything from canned foods and toilet paper to office chairs and backyard pools. Digital sales at Target and Best Buy more than doubled in the most recent quarter.
UNITED PARCEL SERVICE INC.
The added volumes are testing the limits of these delivery networks, which have been operating seven days a week. For FedEx and UPS, residential deliveries are also less profitable than bulk shipments to businesses, which have dried up as many offices and nonessential companies remain closed.
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UPS has said it recently has been delivering 70% of packages to homes, versus about 54% during all of 2019. It has taken on more of Amazon's package volumes after FedEx cut ties with the online giant last year.