The surge in online shopping during the pandemic could put pressure on delivery companies like FedEx Corporation FDX and United Parcel Service Inc UPS. This demand has led to UPS putting limits on the number of packages delivered from certain customers.
What Happened: The Wall Street Journal reports that UPS has put limits on six retailers during the Cyber Monday online shopping event. The retailers are L.L. Bean Inc, Hot Topic, Newegg, Macy's Inc M, Gap Inc GPS and Nike Inc NKE.
The message seen by WSJ said drivers were told not to pick up packages in certain regions on Cyber Monday at these retailers.
“No exceptions,” read the message. Some UPS Workers confirmed this practice to WSJ.
A UPS spokesperson told The Hill that if demand exceeded planned package spacing, UPS would “work with our larger customers to ensure the volume gets picked up and delivered as more capacity becomes available in our network.”
Related Link: PreMarket Prep Stock Of The Day: UPS
Why It’s Important: Both UPS and FedEx raised prices ahead of the holiday season and want to make sure they can meet demands from all partners.
“We’ve worked with our large retail customers to ensure they are aware of how much capacity is available to them,” a spokesperson told The Hill.
While this could be bad news for retailers who can’t get their packages out as fast to consumers, it could show some early leaders in the 2020 holiday season.
The UPS order could be showing that Nike, Macy's and Gap are all having strong order support online from customers. This could lead to strong quarterly earnings for these three publicly traded companies.
The limit from UPS also comes as the company is stepping up its effort with freezers and dry ice production to meet the needs of COVID-19 vaccine shipments. The shipping of vaccines and holiday orders during December could become a large issue for logistics companies.
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