An airplane is seen on the tarmac at the United Parcel Service (UPS) Regional Air Hub in Rockford, Illinois, December 9, 2014. Picture taken December 9, 2014. 
 
 United Parcel Service Inc (UPS.N) said on Tuesday it will start applying surcharges for residential packages this year after its costs soared during the recent disappointing holiday season. 
 
 UPS also reported that fourth-quarter profit fell from a year ago but forecast earnings within the range of estimates. 
 
 UPS, the world's largest package delivery company, warned in late January it would report a fourth-quarter profit below its forecast and market expectations. 
 
 The Atlanta-based company had mobilized more workers and equipment for an anticipated surge in holiday packages, but the extra business failed to materialize. The additional costs primarily affected the company's domestic ground package unit. 
 
 As a result of the poor quarter, UPS Chief Executive Officer David Abney said on a conference call that the company would apply surcharges for residential packages in particular. The additional charges will be applied over several years as contracts with major customers are renegotiated. 
 
 "These pricing strategies will be designed to ensure we are properly compensated for the value we provide," Abney said. 
 
 UPS went through a second consecutive challenging peak season. In 2013, the company was caught off-guard by a late rush of online packages that left an estimated 1.3 million parcels undelivered on Christmas Eve. 
 
 UPS spent $500 million last year on network improvements and worked closely with retail customers to prevent a repeat of the miscues in late 2013, but the rising popularity of e-commerce made forecasting volumes a moving target. 
 
 UPS forecast full-year 2015 earnings in a range of $5.05 to $5.30 per share. Analysts estimated $5.15 a share this year. 
 
 UPS reported fourth-quarter net profit of $1.15 billion, down nearly 2 percent from $1.17 billion a year earlier. 
 
 Earnings per share came in at $1.25, unchanged from a year earlier and matching the expectations of analysts. 
 
 Quarterly revenue rose 6 percent to $15.9 billion from $15 billion a year earlier, including a 7.5 percent increase in revenue from its domestic ground package business. 
 
 Operating expenses jumped more than 20 percent to $9.2 billion from $7.65 billion, which caused a more than 60 percent drop in operating profit at the domestic ground package unit. 
 
 On a GAAP basis, the company reported adjusted earnings per share of 49 cents due to pension-related charges. 
 
 In early trading, UPS shares were up 1.2 percent at $101.47. 
 
 (Reporting by Nick Carey in Detroit; Editing by Bernadette Baum and Jeffrey Benkoe) ||||| United Parcel Service Inc. said Tuesday that its once highly profitable peak season will continue to be a drag on fourth-quarter and full-year earnings even though it plans to boost some prices to try to offset the added expenses of keeping up with increased holiday loads. 
 
 The company averaged more than 30 million deliveries a day during the latest holiday season, executives told analysts in their fourth-quarter earnings call. That was about six million more a day than in the same period in 2012 and 75% more than on its average... ||||| UPS Hates Coming To Your House, To Begin Tacking On Surcharges For Residential Delivery 
 
 Last week, in advance of its quarterly earnings report, UPS admitted that it over-spent on holiday shipping in 2014 and that it wouldn’t make that mistake again . Today, with those quarterly earnings announced, the company announced how it’s going to make back some of its money — by tacking on surcharges for residential deliveries. 
 
 The surcharges aren’t something that you’ll see immediately applied everywhere, but will be rolled out as UPS renegotiates its shipping contracts with its largest customers, reports Reuters. 
 
 “These pricing strategies will be designed to ensure we are properly compensated for the value we provide,” explained UPS CEO David Abney. 
 
 So why put a surcharge on residential deliveries? 
 
 According to UPS, because you’re usually only bringing a single package to a home while many businesses receive multiple parcels each day, these home deliveries cost three times what it costs to make deliveries to businesses. 
 
 As companies renegotiate their deals with UPS, expect to see fewer free shipping offers or for e-tailers to increase their minimum orders for free shipping. 
 
 You should also expect to see a push toward centralized delivery locations, like the Amazon Locker depots that are set up in retail locations like 7-Eleven stores. These allow shippers to bring multiple parcels to one spot where customers can pick them up at their leisure. Don’t be shocked to see Amazon try to make these more attractive, especially for Prime subscribers, and other companies attempt to replicate this model. 
 
 After a dismal 2013, in which weather and consumers’ growing love of e-commerce conspired to leave more than a million parcels undelivered by Christmas day, UPS went all-in for 2014, sinking hundreds of millions of dollars into improvements and hiring around 100,000 seasonal workers. And while it all meant that packages were delivered in time for the holidays, there wasn’t enough business for UPS to ultimately recoup those expenses. 
 
 “UPS customers were delighted with the high quality service we delivered during the holiday season,” said Abney in a statement. “However, the financial results were below our expectations.”
– It wasn't a very happy holiday season for UPS—for the second year in a row. In 2013, the company landed in hot water over an unexpected surge in gifts needing delivery, resulting in some 1.3 million packages that weren't delivered by Christmas Eve. This year, things went the opposite direction: The company hired an extra 100,000 seasonal workers, Consumerist notes, but the uptick in business didn't quite pan out as hoped. The result of all this is new costs for consumers. UPS plans a surcharge for residential deliveries, set to take effect over the course of a few years, Reuters reports. "We absolutely will charge our customers more for the extra costs that we had in peak," CEO David Abney tells the Wall Street Journal. Home deliveries can place a special burden on the company, it says, because homes typically get just one package at a time, whereas a business might receive a pile. Customers may end up seeing higher shipping costs at online retailers, as well as more emphasis on pickup locations like Amazon Lockers in retail stores, Consumerist notes.