UPS Hates Coming To Your House, To Begin Tacking On Surcharges For Residential Delivery 
 
 Last week, in advance of its quarterly earnings report, UPS admitted that it over-spent on holiday shipping in 2014 and that it wouldn’t make that mistake again . Today, with those quarterly earnings announced, the company announced how it’s going to make back some of its money — by tacking on surcharges for residential deliveries. 
 
 The surcharges aren’t something that you’ll see immediately applied everywhere, but will be rolled out as UPS renegotiates its shipping contracts with its largest customers, reports Reuters. 
 
 “These pricing strategies will be designed to ensure we are properly compensated for the value we provide,” explained UPS CEO David Abney. 
 
 So why put a surcharge on residential deliveries? 
 
 According to UPS, because you’re usually only bringing a single package to a home while many businesses receive multiple parcels each day, these home deliveries cost three times what it costs to make deliveries to businesses. 
 
 As companies renegotiate their deals with UPS, expect to see fewer free shipping offers or for e-tailers to increase their minimum orders for free shipping. 
 
 You should also expect to see a push toward centralized delivery locations, like the Amazon Locker depots that are set up in retail locations like 7-Eleven stores. These allow shippers to bring multiple parcels to one spot where customers can pick them up at their leisure. Don’t be shocked to see Amazon try to make these more attractive, especially for Prime subscribers, and other companies attempt to replicate this model. 
 
 After a dismal 2013, in which weather and consumers’ growing love of e-commerce conspired to leave more than a million parcels undelivered by Christmas day, UPS went all-in for 2014, sinking hundreds of millions of dollars into improvements and hiring around 100,000 seasonal workers. And while it all meant that packages were delivered in time for the holidays, there wasn’t enough business for UPS to ultimately recoup those expenses. 
 
 “UPS customers were delighted with the high quality service we delivered during the holiday season,” said Abney in a statement. “However, the financial results were below our expectations.” ||||| United Parcel Service Inc. plans to charge retailers extra fees to deliver packages during the busiest weeks before Christmas, creating a new challenge for an industry already coping with a shift away from traditional stores. 
 
 The surcharges, announced Monday, are a shot across the bow for retailers, including giants such as Wal-Mart Stores Inc. WMT -0.58% and Macy’s Inc., M -2.06% that have been ramping up their e-commerce businesses as they seek to offset declining foot traffic to shopping centers. It also adds to the costs of Amazon.com Inc. AMZN -3.64% and other online players, which rely on UPS and rival FedEx Corp. to handle a surge in holiday shipments. 
 
 The fees will force retailers to decide over the next few months whether to raise shipping prices—something that is difficult to do when online shoppers are reluctant to pay shipping fees—increase the prices of goods or eat the extra costs themselves. Some may seek to avoid the surcharges by spreading holiday deals to other weeks during the season. 
 
 Patrick Gill, chief executive of the high-end fishing gear site TackleDirect.com, said news of the surcharge was frustrating since it is going to be applied when his site needs lower rates to compete against Amazon.com , Wal-Mart Stores and others. 
 
 “This will add up to be another unaccounted for expense during the holiday season,” Mr. Gill said. “It will force us to push some product away from UPS in some cases.” 
 
 For UPS, the move signifies a need to get paid for a service that has become an integral cog in the holiday shopping period, when it must add planes, trucks and thousands of staffers. 
 
 While Amazon and countless other websites are the front door to millions of products on the web, UPS, FedEx and the U.S. Postal Service do the heavy lifting that eliminates trips to stores and delivers packages to homes. 
 
 UPS said it had to impose the charge to offset the additional cost of delivering packages. 
 
 The company is “trying to make sure they are, at the margin, getting compensated for stretching their network,” said Sanford C. Bernstein analyst David Vernon, adding that the carriers have the power to raise prices given how critical they have become to the period. “Without them, Christmas kind of doesn’t happen.” 
 
 Some analysts expect FedEx to follow in some way, as the two rivals often take pricing cues from each other. A FedEx spokesman declined to comment. The company reports its fiscal fourth-quarter earnings Tuesday. 
 
 The surcharges unveiled by UPS will hit its customers during the busiest shipping weeks and on the most popular products during that time. Between Nov. 19 and Dec. 2—the weeks encapsulating Black Friday and Cyber Monday—UPS is adding a 27-cent charge on all ground packages sent to homes. 
 
 Ground orders typically arrive within five days and are a heavily used shipping option during that time since shoppers don’t necessarily need the items quickly. 
 
 Last year, UPS collected on average $7.97 in revenue per item shipped in its U.S. ground network. 
 
 The peak surcharges won’t be in effect for the following two weeks, when shoppers typically take a pause, but they will return for the final holiday rush. From Dec. 17 to Dec. 23, UPS will charge an extra 27 cents for each ground shipment, 81 cents for next-day air and 97 cents for two- or three-day delivery. 
 
 In a twist, the UPS surcharge includes an element that gives stores an advantage. 
 
 The charges apply only to residential deliveries, so retailers and shoppers may be able to avoid the charges by getting orders shipped to stores, an option retailers have been pushing for the past few years with varying success. 
 
 UPS Chief Commercial Officer Alan Gershenhorn said the per-package cost will only “marginally increase” during the holiday period. As an example, UPS said a five-pound next-day air package from Atlanta to Philadelphia will cost 1% more to ship. Another example offered by UPS showed a 2% increase with the added fee. 
 
 UPS daily volume swells to more than 30 million in the weeks before Christmas versus more than 19 million on a normal day. Citi Research estimates the new surcharges will add $50 million in revenue and profit at UPS this year. 
 
 The carrier declined to provide a projection on the revenue impact from the surcharges, but said it already was factored into its outlook. The company had more than $60 billion in revenue last year. 
 
 Shippers may try to avoid the surcharge by offering more deals in October and early November, or by negotiating a discount. “The real objective for the surcharge is to motivate shippers to do their part in avoiding such volume increases,” said Satish Jindel, president of ShipMatrix Inc., a software provider that analyzes shipping data. 
 
 UPS, FedEx and the U.S. Postal Service are all looking to recoup massive investments they are making in their delivery infrastructure to accommodate the surge of packages flowing into their networks in recent years as more people shop online. 
 
 UPS is spending $4 billion this year alone as it automates more package-sorting hubs and opens new warehouses. 
 
 UPS is looking at other ways to recoup costs during peak periods, so it isn’t left holding the bag for the additional investments. Last month, UPS CEO David Abney said the carrier is negotiating with retailers to help them pay for the any additional investments, even the capacity goes unused. 
 
 On Monday, UPS said will also impose surcharges on all large packages above a certain threshold, which cost more to ship and sort, throughout the entire period. Those surcharges will be more onerous, tacking an additional $24 fee to an existing surcharge of $70 for a package weighing more than 150 pounds and over a certain size. 
 
 UPS also will charge a peak surcharge of $249 per package on the largest packages, on top of a $150 fee for such “overmax” packages. A UPS spokesman said that such items only represent a small sliver of packages, since most are shipped through its freight business. 
 
 The company is encouraging shippers to instead send such packages through its freight network, where it recently imposed a second 4.9% increase in shipping rates the past year. 
 
 Write to Paul Ziobro at Paul.Ziobro@wsj.com ||||| Attention Holiday Shoppers: UPS To Add Delivery Surcharges 
 
 Enlarge this image Mark Lennihan/AP Mark Lennihan/AP 
 
 The first day of summer doesn't begin until Wednesday but United Parcel Service already is looking ahead to the colder seasons with plans to charge retailers an extra fee for orders placed around Black Friday and Christmas. 
 
 And consumers could end up carrying that extra weight if retailers decide to pass on the cost by raising shipping fees. 
 
 Online shopping has become so successful that UPS and other delivery services are a fundamental service that keeps the retail season moving. On a normal daily average, UPS handles 19 million packages. During the peak holiday season, that number jumps to more than 30 million packages a day. 
 
 UPS says to meet demand, it's had to add planes, trucks and thousands of employees. The company claims the surcharges are necessary to offset the additional cost of delivering all those holiday packages. 
 
 Between Nov. 19 and Dec. 2 this year, UPS says it will add a 27-cent charge on all ground packages sent to homes. Those dates include Black Friday, which is Nov. 24, and Cyber Monday, which is Nov. 27. 
 
 Consumers then get a two-week reprieve from the additional charge, but the fee makes a comeback to usher in the final holiday rush. 
 
 UPS says from Dec. 17 to Dec. 23, it will charge an extra 27 cents for each ground shipment, 81 cents for next-day air and 97 cents for two- or three-day delivery. 
 
 The delivery fee could backfire on UPS, as The Wall Street Journal reports: 
 
 "Patrick Gill, chief executive of the high-end fishing gear site TackleDirect.com, said news of the surcharge was frustrating since it is going to be applied when his site needs lower rates to compete against Amazon.com , Wal-Mart Stores and others. "This will add up to be another unaccounted for expense during the holiday season," Mr. Gill said. "It will force us to push some product away from UPS in some cases." 
 
 A possible way around the surcharge could be the ship-to-store option. Because businesses generally receive more deliveries, the cost per package is typically lower. 
 
 The holiday season will be here in no time. Why not start that shopping list now? Surely someone you know needs a tacky summer vacation souvenir.
– It wasn't a very happy holiday season for UPS—for the second year in a row. In 2013, the company landed in hot water over an unexpected surge in gifts needing delivery, resulting in some 1.3 million packages that weren't delivered by Christmas Eve. This year, things went the opposite direction: The company hired an extra 100,000 seasonal workers, Consumerist notes, but the uptick in business didn't quite pan out as hoped. The result of all this is new costs for consumers. UPS plans a surcharge for residential deliveries, set to take effect over the course of a few years, Reuters reports. "We absolutely will charge our customers more for the extra costs that we had in peak," CEO David Abney tells the Wall Street Journal. Home deliveries can place a special burden on the company, it says, because homes typically get just one package at a time, whereas a business might receive a pile. Customers may end up seeing higher shipping costs at online retailers, as well as more emphasis on pickup locations like Amazon Lockers in retail stores, Consumerist notes.