*UPS Raises Rates 1 Day After FedEx Increase

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Following the lead of rival FedEx Corp., Memphis, TN, United Parcel Service said yesterday it will increase its air shipment rates 3.7 percent, effective Feb. 5. International shipments will rise 2.9 percent.


Ground service -- the bulk of UPS' business -- will rise 3.1 percent for all weights and zones, and the fee for residential deliveries will increase from $1 to $1.05 on all packages.


UPS, Atlanta, also said it will keep the 1.25 percent fuel surcharge it began assessing in August, but hopes fuel prices will eventually stabilize at lower levels.


FedEx announced Wednesday it will increase U.S. air express rates 4.9 percent on Feb. 1. UPS said it would publish the new rates Jan. 4 on its Web site.


Earlier this year, UPS said domestic levels for package volume during the two-week period that ended Dec. 8 were flat compared with 1999 because of slowing customer shipments. This follows a slowing in domestic volume increases in October and November to 4 percent, compared with the 5.5 percent growth reported for the first nine months of the year.


UPS said it expected a slight slowdown in the rate of fourth-quarter growth because of one less shipping day this holiday season, a softening economy and comparisons with strong results posted a year ago.


The unusual slowing in holiday shipments has compounded the situation, UPS said, although its integrated network allows the company to adjust to changing economic conditions. The company now expects earnings-per-share growth of 7 percent to 10 percent for the fourth quarter.
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