On January 3, UPS implemented its annual general rate increases, as it does every year at about that time.

The nation's largest package carrier announced late last year that rates for UPS Ground service, which moves the bulk of the company's traffic, would be going up by an average of 2.9 percent. That's a full percentage point above the average increase of 1.9 percent in 2004.

UPS also said it would reinstate a fuel surcharge that it had dropped in January of 2004. The surcharge initially will be set at 2 percent but will be reviewed monthly, based on the Department of Energy's average weekly on-highway diesel fuel price.

Overall, this year's increases are very modest compared to the increases taken by less-than-truckload (LTL) motor carriers last summer—many of which came in at 5.9 percent, not counting fuel surcharges.

Comparatively modest or not, it's important to verify exactly how the announced increases will apply to your business. Any time the word "average" precedes a given percentage rate increase it should immediately signal to you that some percentages will be higher than the average and some will be below that average. That's when you should begin crunching some numbers to find out precisely what's going on.

We did just that and quickly learned that the increases for short hauls are above the 2.9-percent average, while increases on longer hauls are below that average. Here are the percentage increases for several randomly chosen package weights shipped to selected UPS zones:

In addition to the percentage increases shown in the chart, you'll need to add in the 2-percent fuel surcharge. Don't forget that the surcharge will be reviewed monthly and the percentage may change. Once the 2-percent surcharge is figured in, most rate increases for shipments to Zone 2 destinations will range from 4.26 percent to 6.09 percent. The only exception falling below that range we found was for 6-pound packages; in that case, the percentage increase was 3.46 percent.

Even when you add the 2-percent fuel surcharge on long hauls, you'll find the combined percentage increases are above 2.9 percent.

This random sample shows that if you're not correctly factoring in the standard increase plus the new fuel surcharge, you won't be able to fully recover this year's rate hikes. Keep in mind, moreover, that we've only looked at standard rates to commercial establishments. If you're shipping to commercial establishments in remote ZIP codes, for example, you'll have to figure in another surcharge increase of 25 cents per package—and several other surcharges have gone up as well.

It should be noted that both FedEx and DHL also raised their rates in January, with increases and surcharges that are similar to those taken by UPS, as far as we have been able to determine.