FedEx to boost its delivery rates 4.9%

Package delivery company FedEx Corp. said Friday that net average rates at its express delivery unit would rise 4.9% in 2008, which analysts said was the biggest hike since 2001.

The company raised rates by a net 3.5% for 2007 and 2006.

Rates at FedEx Express will rise by 6.9% in 2008, but will be partially offset by a 2-percentage-point reduction in the fuel surcharge FedEx charges customers.

“FedEx’s 4.9% effective list rate increase at its flagship Express division signals that domestic parcel pricing remains firm despite economic concerns,” Morgan Stanley analyst William Greene wrote in a research note. “In fact, this is the largest rate increase for domestic express shipments since 2001.”

The new rates will become effective Jan. 7 and will apply to both domestic and foreign export express packages and freight shipments.

Rates and surcharges at ground delivery unit FedEx Ground also are set to increase. Those changes will be announced later this year, the Memphis, Tenn.-based company said.

FedEx also said that as of 2008 FedEx Express customers importing goods to the United States will pay U.S. dollar rates to avoid exposure to currency fluctuations.

FedEx rival United Parcel Service Inc. usually raises rates for its ground delivery service in November. Both companies are seen as bellwethers of U.S. economic health, based on the premise that package volumes tend to rise in a faster-growing economy.