Why FedEx, UPS have delivery headaches
Consumers might delight in the ease of front- door delivery for a mattress, trampoline or gym equipment. FedEx Corp., now handling an increasing number of these bulky shipments, has mixed feelings.
As more online shoppers snap up the type of hefty items once brought home in a pickup truck or on a car roof, FedEx is savouring the volume while facing a logistical headache: Some of these packages don’t flow as smoothly through a company built to move small parcels and overnight envelopes.
The bigger boxes may not fit through automated sorters or be easily read by high- tech package scanners. Oddly shaped containers take up more space on trucks, disrupting efficient packing. Costs can rise, too, with more human handling and greater fuel use because of heavier cargo. Outsized pieces helped drive a 36 per cent surge in FedEx Ground’s operating expenses last quarter.
“It’s really a demonstration that e- commerce is growing and that drives demand for our business,” said Patrick Fitzgerald, FedEx’s senior vice- president marketing and communications. “We just need to be in close collaboration with customers so we’re ready for the types of packages we have there.”
FedEx and United Parcel Service Inc., the world’s biggest packagedelivery company, will have to get used to customers’ shipping expectations, according to Sucharita Mulpuru, a retail analyst with Forrester Research Inc.
E- commerce purchases of furniture are projected to grow at a rate of about 15 per cent from 2014 to 2019, with an 11 per cent rate for car parts, according to Forrester. That compares with a 10 per cent rate for all e- commerce.
“These are all big categories that are absolutely outpacing the market,” Mulpuru said. “People are increasingly more comfortable with more categories of e- commerce now, and they are happy to purchase almost anything online.”
For shipments of more than 68 kilograms, measuring more than 2.7 metres in length or more than four metres in length and girth combined, FedEx and UPS have socalled less- than- truckload freight divisions that pack goods from multiple customers on each trailer.
Consumers are about to pay more for the privilege of getting large online purchases sent home. FedEx’s surcharge for parcels it considers oversized will rise 17 per cent to US$ 67.50 on Jan. 4. UPS’s rate is $ 57.50, the same as FedEx’s current fee.
UPS is adding a new surcharge this year for retailers who ship a large number of oversized packages during the peak holiday season leading up to Christmas, said Steve Gaut, vice- president of public relations and communications. Spokeswoman Susan Rosenberg said big- parcel volumes were up, but that “e- commerce in aggregate has more likely shifted to smaller and lighter- weight packages.”
Forty- four per cent of consumers in a recent survey agreed the bigger the purchase, the less likely they were to buy it online, said Forrester’s Mulpuru. More surprising is another 23 per cent completely disagreed with that statement.
“There is a huge group of people who will buy anything online, regardless of its bulkiness,” Mulpuru said. She recently proved that thesis herself, purchasing a bathtub over the Internet. It was delivered by freight.