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COVID-19

Shipping company profits and costs have increased amid pandemic e-commerce boom

Justin Ho Feb 1, 2021
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A UPS driver gets into his truck while on his delivery route on July 30, 2020 in San Francisco, Calif. Justin Sullivan/Getty Images
COVID-19

Shipping company profits and costs have increased amid pandemic e-commerce boom

Justin Ho Feb 1, 2021
Heard on:
A UPS driver gets into his truck while on his delivery route on July 30, 2020 in San Francisco, Calif. Justin Sullivan/Getty Images
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UPS reports its fourth quarter results Tuesday. The shipping industry has benefited from the explosion of e-commerce during the pandemic: In the third quarter, UPS profits were up over 11% compared to the same time the year before.

But their costs have increased, too. Shipping companies have expanded capacity to handle the surge in deliveries during the pandemic.

Supply chain management professor Dale Rogers at Arizona State University said shippers have also had to upgrade safety.

“All of those costs are hitting the bottom line of a lot of these carriers,” Rogers said.

He said shippers are also servicing sectors of the economy that aren’t doing so well. For instance, Rogers said there’s a shortage of semiconductor chips right now, which means that there are less of them to ship to computer and auto manufacturers.

“So all that kind of stuff directly affects logistics companies like UPS,” he said.

Last week, UPS announced it’ll sell off its freight business, which focuses on trucking cargo around the country.

Adie Tomer at the Brookings Institution said that’s a bet on the profitability of home deliveries.

“First- and last-mile deliveries or pickups is absolutely the high-growth area here,” Tomer said.

UPS said the sale will help the company be “better not bigger.”

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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