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FedEx raising ground shipping rates 4.9 percent

| December 5, 2010 8:00 PM

MEMPHIS, Tenn. (AP) - FedEx Corp. is raising rates for ground shipping and home delivery by an average of 4.9 percent next month.

The world's second-largest package delivery company said Friday that the new rates will take effect Jan. 3. The full rate increase of about 5.9 percent is being partly offset by adjusting when the fuel surcharges kick in, which trims the surcharge by 1 percentage point.

FedEx also said rates for its SmartPost service - contracts with individual shippers - will change, but it declined to give details.

In September, FedEx announced it would raise rates for its FedEx Express package and freight delivery services on Jan. 3. Those increases will average 5.9 percent for domestic and U.S. export shipments, but total 3.9 percent after the fuel surcharge is lowered.

FedEx has been feeling the effects of an uneven global economic recovery. International shipments have been growing, helping the company double its profit in the quarter that ended in August, but a sluggish pace in the U.S. is causing the company to cut 1,700 jobs in its U.S. freight business.

The company is now gearing up for the holidays, when it expects to move nearly 16 million packages on the busiest day, about 11 percent higher than last year. The company benefits from an increase in online holiday gift-buying - as those orders are often shipped to customers by FedEx or UPS.

Company officials have said they expect a solid holiday season but that predicting business trends into next year would be difficult.

Predictions from FedEx and rival United Parcel Service are closely watched by economists as a signal of the economy's health and direction as consumer spending accounts for about 70 percent of the U.S. economy.

FedEx shares fell 21 cents to close at $95, near the top of their 52-week range of $69.78 to $97.75.