American consumers are enjoying a rapidly growing love affair with e-commerce, but it's creating nightmares for shipping companies. As a result, it might cost more to get your next online purchase to your door during peak shopping periods, including the next year-end holiday season.
On Tuesday, United Parcel Service (UPS) reported disappointing earnings results for the fourth quarter of 2014, with earnings per share at $1.25, or flat compared to the same period in 2013.
The company partly blamed its U.S. operating results on "higher than expected peak related expenses."
"UPS customers were delighted with the high quality service we delivered during the holiday season," UPS CEO David Abney said in a press statement. "However, the financial results were below our expectations. "
The problem is predicting e-commerce demand, which "is both hard for our customers and for us," UPS Chief Financial Officer Kurt Kuehn told Reuters.
While online shoppers have created huge new swaths of business for the shipping giants -- especially during retailing's key holiday shopping season -- they've also led to logistical logjams.
For example, both UPS and industry rival FedEx (FDX) were caught flat-footed during the 2013 holiday shopping season, when a late surge in online sales coupled with bad weather, delayed many shipments.
And during this past holiday season, according to Kuehn, UPS had to deal with higher costs as consumer demand fell off between the season's two busiest shopping times, Black Friday and the days just before Christmas. That left UPS with what he described as a "U-shaped peak season."
So, some of the shipping companies are adding on surcharges to offset the costs brought on by online shopping surges. FedEx has ready increased its regular shipping rates by an average of 4.9 percent.
UPS says it costs about three times as much to deliver to homes than to businesses, which usually receive several packages in a single trip. Therefore, it says it's considering surcharges on residential package deliveries starting late next year, during the next holiday shopping season.
"UPS is evaluating pricing changes during peak demand periods for customers that ship to residential addresses in order to be fairly compensated for additional costs incurred to deliver the surge in shipping demand that occurs during the holiday periods," company spokesman Steve Gaut told CBS MoneyWatch.
Gaut points out that UPS delivered over 30 million packages daily during last year's period compared its average, nonpeak daily deliveries of 17 million. It also invested in new facilities, equipment and technologies, and hired more than 100,000 seasonal workers, to manage peak demand during the holiday season.
Said Gaut: "The company will address future peak demands with both efficiency improvements and pricing actions."