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Package carriers raise fees
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January 3, 2002: 8:48 a.m. ET
UPS, Airborne following FedEx lead on air shipments to homes.
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NEW YORK (CNN/Money) - The nation's package carriers are expected to roll out new fees next week on all airborne deliveries to residential addresses that will, in some cases, inflate certain delivery costs by 20 percent, according to a published report Thursday.
The new fee is a double-whammy for customers who have already been hit with an increase in basic shipping charges, the Wall Street Journal reported. Combined, the fees could cause the price of some shipments to increase 40 percent.
FedEx Corp. (FDX: Research, Estimates) , United Parcel Service Inc. (UPS: Research, Estimates) , and Airborne Inc. (ABF: Research, Estimates) all plan to start charging $1.10 to $1.35 extra for each residential air delivery. UPS and Airborne are also following FedEx in imposing a separate fee for air shipments to residences that are considered out of the way. Such fees are already widespread in ground shipments, the Journal reported.
Additionally, UPS, which makes twice as many deliveries as FedEx and Airborne combined, plans to double its $5 charge for customers who fail to put their account number on the delivery slip. Hazardous materials charges on ground shipments will jump 18 percent to $20. The company also plans to start charging a quarter for certain specially printed return labels.
The fee increases come amid a slump in delivery volume in a sluggish economy that has forced package carriers to hunt for extra revenue.
Dwight Sigworth, executive vice president of AFMS Transportation Management Group LLC, called the extra fees "stealth income raisers."
"People will negotiate forever over...their rates, but it is these fees that are increasing the profitability of the carriers," he told the Journal.
The delivery companies argue that they are just trying to pay for extra services and not indiscriminately trying to boost the bottom line.
"We're trying to target the increases to things that are extra hard and extra costly to do," James Webb, senior vice president of strategic marketing, planning and analysis at FedEx, told the paper.
FedEx shares slipped 98 cents to $50.90 Wednesday. UPS shares slid 4 cents to $54.46 a share and Airborne shares fell 3 cents to $14.80. 
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