GUEST EDITORIAL: A LICENSE TO STEAL?
For some time now, it’s been clear that UPS and FedEx have been making a mockery of our anti-trust laws. This matter is very near to my heart (and my wallet). A few years ago, I discussed it with execs at NRF. All agreed it was a travesty, but no one seemed to want to make the effort to do anything about it. We also use a parcel management firm called Shippers Advocate and they lamented the abuses perpetrated upon us and others by UPS and FedEx but again, were not much interested in filing complaints or otherwise annoying these shipping giants who seem to have a license to steal.
Last week, I wrote a letter to Pete Buttigieg, our U.S. Transportation Secretary in Washington D.C., explaining how UPS and FedEx have essentially cornered the parcel delivery business in the United States and have consistently colluded to fix prices in order to fatten profits and drive their share prices higher. From my letter:
“Did you know that every year UPS and FedEx raise their prices at the same time and, remarkably, their new prices go up in tandem and almost always more than the rate of inflation and higher than the consumer price index? And that’s for BOTH COMPANIES, acting in lockstep. To add insult to injury, some years ago when oil and gasoline prices spiked, BOTH COMPANIES added fuel surcharges on top of their normal delivery charges so as to be compensated for the higher prices they were paying at the pump. After a while, oil and gas prices came down significantly, but the fuel surcharges continued — for BOTH COMPANIES. And then they came up with the ultimate rip-off. While their rate cards were based on parcel weight, they both decided to go to “dimensional weight” in which a package’s length x width x height is divided by 166 so that a 5 pound package might now be billed out at, say, 20 pound “dimensional” weight at a significantly higher rate. And this was true of BOTH COMPANIES.
And when that wasn’t enough for them, on January 1, 2017, they lowered the denominator from 166 to 139 so that now that 20 pound ‘dimensional’ shipment might be billed out at, say 25 pound ‘dimensional’ weight. And this was true of BOTH COMPANIES and continues to be true today. Even the two denominators, 166 and 139, which seemed arbitrary, just happened to be identical and were changed at the same time. BOTH COMPANIES collude and fix prices; the evidence couldn’t be clearer. If this isn’t restraint of trade I don’t know what is. And what happens next when they perhaps decide to lower the denominator to, say, 100? Do we all have to close our doors like so many independents have already done during the pandemic?”
I’d love to hear from MR readers about this. It’s a huge problem and growing bigger at an alarmingly accelerating pace. I just took a look at last week’s UPS billing and the “add-ons” are truly unbelievable. I’m curious to know if the rest of the retail world is as troubled by this as I am. I’d be shocked if others think that shipping costs are a non-issue, or if they’re content to let UPS and FedEx continue to ride roughshod over them, raising costs willy-nilly and with complete impunity.
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Gilbert Rose is a specialty retailer in Wyandotte, Michigan; MR readers can respond to this post or contact grose@wyan.org.
Check out the scan of today’s FedX “Saver” invoice for some hard-copy evidence supporting my complaint.
When you purchase 22 suits and the shipping costs add 15% to the merchandise cost, something is definitely out of whack.
Now if only I knew how to attach that scan to this e-mail response I would certainly do so.
Hi Gil….. Glad to see you are well and well aware of what’s going on. But I think the problem you are referring to may not be a
problem to most of us. As consumers we
have demanded “ free shipping”. The stores and online vendors have listened and have provided this free shipping with the actual costs being hidden in the gross margin and being elevated as needed. Coming out of the pandemic the sellers are focused on growing their businesses back as quickly as possible and not even mildly annoyed at higher shipping costs ….. as long as they are shipping out orders ! This of course allows shippers a free rein on charges and thus nobody really cares about what the consumer is not seeing or not complaining about. The problem you have identified is only a problem to you and other caring merchants until or if the consumer makes
it their problem. Out of sight,out of mind !
Barry:
Yes, those very thoughts had occurred to me, but that’s hardly the issue. It’s really a question of the federal government allowing, even perhaps encouraging, these two carriers to thumb their noses at the anti-trust laws, collude and fix prices, and essentially rip-off those of us who do have to pay for shipping. Send me your e-mail address and I’ll forward a FedX invoice we received just today. It made my blood boil. I imagine you will react similarly.
Call your congressman and see if he knows what “Taft Hartley “ is or is all about. Chances are he will not but rest assured he was elected by at least some money donations from FedEx and UPS . There is no longer any congressional oversight by the US Congress because they are all elected to their seats with and by the help of corporate America. Good luck fighting against that group !Remember the breakup of “Ma Bell” ? and others in the last century ???? Well it’s a new game now and little guys are neither listened to or tolerated so again I say , Good Luck to you in your fight for what’s right !
That’s what it is, Barry…..a fight for what is right. The problem isn’t UPS/FedEx as much as it is the federal government that colludes with the colluders. The fight is really just beginning, and it is going to be interesting to see what happens. We have lost the ability to manage the tool of capitalism to manage our economy. Pay attention for the next few months, and the rest of this year.
I don’t have the luxury of wallowing in rancor, nor to be jaded and fall into “can’t fight city hall” thinking. I can, and if I don’t, I’m the problem, too.
This really is an opportunity. Right now. MONOPOLIES ARE ILLEGAL. Monopolies are also flagrant in their regard for that illegality, because no one has cared. That’s abdication of duty. Gotta help fix it!
Price fixing is illegal. You know; AGAINST THE LAW.
And the government that made the laws and is purportedly for them to enforce winks and moves on. No enforcement, no penalties, virtually ever.
In my father’s example, it is impossible to accept that there is no collusion, yet no one is minding the hen house.
The issue becomes something repellant: Government is in collusion with FedEx and UPS. Doesn’t matter which party.