On January 5, as they usually do at this time of the year, both UPS and FedEx raised their rates. For the most part, this year's general rate increases are far more modest than we have seen in several years—welcome news indeed for both shippers and receivers of packages.

The most noteworthy changes in rates and charges are those involving ground shipments. Both UPS Ground and FedEx Ground raised their rates for shipments to commercial establishments by an average of 1.9 percent. In addition, UPS Ground announced that it would discontinue its 1.5-percent fuel surcharge, effective January 5. FedEx Ground will take the same action on its surcharge as of January 26.

What isn't getting as much publicity is the substantial increase in rates for lightweight packages moving via ground service to rural commercial locations. For the first time ever, both carriers are tacking a surcharge onto all ground commercial deliveries to out-of-the-way destinations, of which there are hundreds. The surcharge, an extra $1 per package, is only partially offset by the discontinuance of the fuel surcharge.

To get a better idea of the increases facing shippers of packages weighing 10 pounds or less that are destined for commercial locations in rural areas, take a look at the difference between 2003 and 2004 rates for UPS Ground service to Zone 7 destinations in the chart in the next column.

Shipment weight is one of the factors that determines the level of increase. If, for example, you were to ship a 45-pound package to a rural delivery point in Zone 7, the percentage increase would only be 4 percent.

Another important factor to be aware of: The shorter the distance to the delivery point, the higher the percentage increase you'll pay. For UPS Ground service shipments to points in Zone 2—the shortest hauls—the increases range from 22.03 percent for a ten-pound package to 29.36 percent for a one-pound box.

One way to reduce the impact of these increases would be, if practicable, to combine several lighter-weight packages into a single heavier package. For example, let's say you're about to ship four, two-pound packages to a rural Zone 7 destination. By combining them into a single eight-pound package, the total charge would drop from $22.68 to $7.38—a savings of $15.30, or 67.46 percent. Even if using a master carton added some weight, you'd realize a substantial saving on the freight charge. Of course, the added cost of purchasing a master carton would have to be figured in, but you'd still be ahead.