Shipping giants UPS and FedEx will increase rates for 2005. UPS increased rates 2.9% effective in January for its Ground, Next Day Air, 2nd Day Air, 3 Day Select and U.S. international services. Rates for its Hundredweight service will increase 5.9%. Also in January, UPS set a maximum cap of 9.5% on its fuel surcharge for its Next Day Air, 2nd Day Air and 3 Day Select and international services by setting. The surcharge will continue to be calculated from an index based on the average price for a gallon of kerosene-type jet fuel.

FedEx is raising rates at its ground division by an average of 2.9% and at its FedEx Express air unit by 2.6% to help offset higher fuel costs. Citing the dramatic run-up in oil prices in recent months, FedEx said it raised freight published rates at FedEx Express by an average of 4.6% and lowered its fuel surcharge by two percentage points, effective Jan. 3.

dhannon@reedbusiness.com