 United Parcel Service Inc. said Tuesday that its once highly profitable peak season will continue to be a drag on fourth-quarter and full-year earnings even though it plans to boost some prices to try to offset the added expenses of keeping up with increased holiday loads. As a result of the poor quarter, UPS Chief Executive Officer David Abney said on a conference call that the company would apply surcharges for residential packages in particular. 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. 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.
– 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.