FedEx Hikes Ground Rates

The increase will be 4.9%.

Author:: Ted Reed
Publish date:: Dec 4, 2006 1:25 PM EST

FedEx

said Monday it will raise ground delivery rates next year by 4.9%, matching the increase that rivals

UPS

and DHL had previously announced.

The FedEx increase "confirms our view of a detente in the parcel industry," wrote analyst Scott Flower of Banc of America Securities in a research report. "Pricing

is firming and perhaps accelerating slightly, albeit from a low base, though selected pockets of competition may exist on an account-by-account basis," he said.

Banc of America Securities has financial relationships with both FedEx and UPS.

Last month, Memphis-based FedEx said it would boost air express rates by 3.5%, which includes a 5.5% increase in list rates and a 2% reduction in fuel surcharge. UPS subsequently raised air express rates by 4.9%, but said that despite the higher percentage increase, its air rates remain lower than those at FedEx.

DHL, the No. 3 overnight package carrier, last week announced a ground rate increase as well as a 3.9% hike in air express rates. The three carriers' new rates take effect Jan. 1.