FedEx raises Express rates 6.9%

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FedEx announced rate increases that will take effect January 7, 2008, including an average increase of 6.9% on Express package and freight rates for US and US export services.

Last year, the company increased these rates 5.5%. This year's increase, the biggest lift in 10 years, is set to affect mostly retail customers and small and mid-size businesses with lower mail volumes.

The company also announced plans for a 2% decrease in its fuel surcharge. Other surcharge increases were announced including an additional handling charge, address correction services, delivery area surcharges, C.O.D. charges and return label costs.

The company's rate change is set to encourage larger mail volumes and discourage the use of ground shipping as a way to alleviate costs. At FedEx, the typical US air shipment brings in more than twice the revenue of a ground-delivered shipment.

Air deliveries contributed 64% of FedEx's revenue in the past quarter. FedEx flew an average of more than 3.4 million packages a day in its latest fiscal quarter ended August 31.

Increased rates and surcharges for FedEx Ground will be announced later this year. UPS is expected to announce their 2008 rates next month.

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