United Parcel Service Inc., the world's largest package-shipping company, will increase the cost for ground and air deliveries by an average of 4.9 percent on Jan. 1.
Prices will rise 6.9 percent, while a charge added to cover the cost of fuel will decline 2 percentage points, the Atlanta- based company said in a statement today. It is the largest increase for ground shipments since 1998, according to William Greene, a Morgan Stanley analyst.
UPS is joining FedEx Corp. and other shipping companies in boosting rates to blunt higher spending on labor, equipment and infrastructure. The rate increases signal there won't be a pricing war that potentially could slow profit growth.
UPS is saying the economy will remain robust through 2007 and that their rate increase will be absorbed,'' said Jim Corridore, a New York-based analyst with Standard & Poor's. He rates the shares as buy'' and lifted his 12-month price target by $10 to $95. He also has a strong buy'' on FedEx.
FedEx said Nov. 3 it would increase 2007 U.S. air shipment rates by 3.5 percent, including a lower fuel surcharge. Memphis, Tennessee-based FedEx hasn't set ground rates for next year.
Both shipping companies adjust the fuel fee monthly, based on changes in the average prices paid for diesel and jet fuel.
It is very unlikely that UPS will pass through the full rate increase to all its customers, but the large list rate increase is still a positive sign,'' Greene said in a report today. UPS and FedEx typically offer discounts to larger customers.
UPS and FedEx also are changing the way they charge for oversized ground shipments to account for packages' size instead of weight, which will increase charges.
Shares of UPS climbed 55 cents to $79.13 at 4:02 p.m. in New York Stock Exchange composite trading. FedEx shares fell 70 cents to $117.44.
UPS raised 2006 rates for air and international deliveries by a net 3.5 percent and ground shipments by 3.9 percent.
Prices will rise 6.9 percent, while a charge added to cover the cost of fuel will decline 2 percentage points, the Atlanta- based company said in a statement today. It is the largest increase for ground shipments since 1998, according to William Greene, a Morgan Stanley analyst.
UPS is joining FedEx Corp. and other shipping companies in boosting rates to blunt higher spending on labor, equipment and infrastructure. The rate increases signal there won't be a pricing war that potentially could slow profit growth.
UPS is saying the economy will remain robust through 2007 and that their rate increase will be absorbed,'' said Jim Corridore, a New York-based analyst with Standard & Poor's. He rates the shares as buy'' and lifted his 12-month price target by $10 to $95. He also has a strong buy'' on FedEx.
FedEx said Nov. 3 it would increase 2007 U.S. air shipment rates by 3.5 percent, including a lower fuel surcharge. Memphis, Tennessee-based FedEx hasn't set ground rates for next year.
Both shipping companies adjust the fuel fee monthly, based on changes in the average prices paid for diesel and jet fuel.
It is very unlikely that UPS will pass through the full rate increase to all its customers, but the large list rate increase is still a positive sign,'' Greene said in a report today. UPS and FedEx typically offer discounts to larger customers.
UPS and FedEx also are changing the way they charge for oversized ground shipments to account for packages' size instead of weight, which will increase charges.
Shares of UPS climbed 55 cents to $79.13 at 4:02 p.m. in New York Stock Exchange composite trading. FedEx shares fell 70 cents to $117.44.
UPS raised 2006 rates for air and international deliveries by a net 3.5 percent and ground shipments by 3.9 percent.