As FedEx, UPS Limit Package Pickups For Holiday Season, Small Retailers Most Affected

Online shopping has soared during the pandemic as lockdowns force shoppers to stay indoors. The skewed demand is overwhelming for carriers like United Parcel Service, Inc UPS, and FedEx Corporation FDX, which are forcing retailers for volume-based agreements, Barron's reported earlier this week.

What Happened: Carriers are placing volume limits on some businesses as their shipping network face capacity issues during the pandemic-fueled rise in online holiday shopping.

Small businesses are the most affected due to no leverage to negotiate for better prices or quotas, Business Insider reports.

It is not the first time carriers have placed shipping limits during the holiday season, but small businesses are crying foul for lack of transparency from FedEx.

In many cases, small retailers were affected with limits as low as 75 packages per day right before Black Friday and Cyber Monday.

"We had been pretty loyal to FedEx, probably 75% of our shipping business has gone through them, the balance going through USPS, and so we didn't really have any contingency plans," the owner of Letterfolk, a small retailer, told BI.

Why It Matters: On-time deliveries are a key metric for logistics companies. It would want to hit targets despite the pandemic year's challenges but limiting package pickups poses a problem for retailers who depend on them.

Amazon.com, Inc AMZN has tried to stay ahead of the curve by taking control of its delivery, leading to faster shipping times — but it has also capped the number of orders third-party sellers can ship to its warehouses, as reported by CNBC last week.

Bix-box retailers like Costco Wholesale Corporation COST, Target Corporation TGT, and Walmart Inc WMT have warnings on their website for shipping delays but they have an advantage of a huge network of brick-and-mortar stores and curbside pickup option.