UPS CEO: Retailers could pay for unplanned holiday surge

ATLANTA (Reuters) - United Parcel Service Inc's chief executive officer said on Monday the company's closer collaboration with major retailers should bring a smooth holiday season, but he said UPS (UPS.NY)would charge customers more or even refuse packages if last-minute sales by a major customer threaten the company's system.

    "With the changes we?ve made, I feel very comfortable about peak (season) this year," David Abney told Reuters in an interview at UPS headquarters in Atlanta.

    UPS has put in place a "control tower" system in which company experts manage the flow of packages in real time and anticipate problems. Imposing additional charges or refusing delivery for existing customers would be "the exception versus the rule," Abney said.

    Last year a late surge in pre-Christmas online retail sales left an estimated 2 million express packages undelivered in the United States. UPS, the world's largest package delivery company, was badly affected by the last-minute flood of packages.

FedEx Corp, the main rival of UPS, is also working with retailers to manage package volume forecasts ahead of this year?s peak. The Memphis-based company has made it clear that if a late, unplanned holiday sale threatened to derail its system, it could decline that business.

Abney said the company?s brick-and-mortar and e-commerce retail customers are holding "Black Friday" sales earlier than normal this year and that UPS believes it is part of an effort by retailers to find ways to smooth out the pre-Christmas online ordering bulge.

If a late e-commerce surge raises costs for UPS this year, Abney said, "We certainly in 2015 and beyond will look very closely at what we need to do" to offset those costs, including the possibility of holiday season price increases.

"If we see going on into future years that there?s going to be additional peak cost because of this last-minute surge, we would certainly look to address that through revenue management," Abney said.

(Editing by Meredith Mazzilli and Douglas Royalty)