Category: Industry News

The nation’s three major parcel delivery carriers posted stellar peak-season performances, aided by perhaps the strongest collaborative effort from their customers since e-commerce became a staple of holiday shopping and shipping, according to data from ShipMatrix, a unit of consultancy SJ Consulting.

UPS Inc. showed the strongest year-over-year improvement, with on-time deliveries for the six-week period rising to 98.5 percent from 95.3 percent, according to ShipMatrix data. Given that UPS had projected a record average of 31 million daily deliveries, a 3 percentage point gain to near-flawless levels was “huge” and “took a lot of effort,” said Satish Jindel, head of SJ and Ship Matrix. “It is much easier to go from, say, 82 to 85 percent than from 95 to 98 percent,” Jindel said in an e-mail late Friday.

The free shipping that consumers have come to expect when ordering online could be jeopardized by the latest rate hikes imposed by UPS (NYSE: UPS) and FedEx (NYSE: FDX) .

The average rate hike of 4.9% is the same amount the two carriers have imposed every year since 2010. But the increases in ancillary fees and surcharges are what could wreak havoc with free shipping, because they’re targeted at the residential customer — and some rates will rise as much as 30% or more.

Although UPS has couched the rate hikes as a way to improve customer service, John Haber, the CEO of supply chain consultancy Spend Management Experts, says the “rate increases are massive and are going to negatively impact shippers of all sizes.”

It has been a jolly holiday season for retailers, and that has benefited FedEx (ticker: FDX) and United Parcel Service (UPS) too.

Where we were: Both stocks have trailed the market in 2018, with UPS off more than 20% and FedEx down nearly 38%.

Where we’re headed: The firms may have a better 2019, as capacity and execution seem aligned, says Cowen & Co.