UPDATE: UPS To Raise Rates An Average Of 4.9% In 2010

(Updates throughout with additional background, including material on FedEx in last paragraph.)

 
   By Bob Sechler 
   Of DOW JONES NEWSWIRES 
 

United Parcel Service Inc.'s (UPS) main ground and air shipping rates are set to rise an average 4.9% early next year.

The planned increase in the package-delivery giant's base ground rate is slightly less than a 5.9% hike that it put in place to start 2009.

The increase in air rates is the same as in 2009. UPS said the base rate for its air express and U.S. origin international shipments will climb an average 6.9%, offset by a 2% reduction in fuel surcharge.

The new rates take effect Jan. 4, when fuel surcharge tables for air express and ground services also will be adjusted. UPS said the changes will more closely align air and ground fuel surcharges, reducing volatility of air surcharges when fuel prices fluctuate.

Last month, UPS posted a 43% drop in third-quarter profit on a deeper-than-expected slump in daily U.S. volume as the freight sector overall continued to report mixed signs of economic recovery.

UPS's shares slid 0.5% to $57.23 in after-hours trading. The stock has gained 17% in the past year.

In September, rival FedEx Corp. (FDX) announced plans for an average 5.9% rate increase for its Express unit early next year, slightly less than the 6.9% increase it put in place to start 2009. In both cases, FedEx noted that lower fuel surcharges likely would offset about 2% of the rate increases.

- By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com

(Kathy Shwiff contributed to this report)

(END) Dow Jones Newswires

November 20, 2009 17:52 ET (22:52 GMT)

Copyright (c) 2009 Dow Jones & Company, Inc.