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.
Gilbert Rose is a specialty retailer in Wyandotte, Michigan; MR readers can respond to this post or contact firstname.lastname@example.org.