Is Amazon Really to Blame for Carriers Hiking Their Shipping Rates?
By: FierceRetailIT February 19, 2014
UPS and other carriers raised their shipping rates in January, much to the chagrin of U.S. e-commerce retailers. Now, some industry observers believe Amazon may be the cause of the price hikes.
After all, they argue, it was the millions of new Amazon Prime subscribers (Amazon added one million new members in the third week of December alone) who ordered last-minute Christmas gifts, flooding the system with packages and rendering UPS, FedEx, and other carriers unable to deliver packages in time.
"Not only is e-commerce increasing our volumes during peak, it's making holiday volume spikes. Network expansion costs [have] increased to insure we have capacity for the forecast volume," FedEx Ground CEO Henry Maier said a week before Christmas. FedEx's rates rose an average of 3.9 percent starting January 6.
UPS is also blaming its rate hikes - up to seven percent on packages under 10 pounds - squarely on Amazon's shoulders. The unexpected shipping volume in December resulted in "hiring and training costs, overtime hours, and additional weekend operations," UPS executives said in its January earnings call. As a result, the shipper needs to "make appropriate investments such as facility expansions, process automation, job simplification, and acceleration of technology implementations."