ATLANTA (AP) _ United Parcel Service Inc. said Friday it will raise its ground shipping rate 3.5 percent effective Jan. 7.

Overnight and two-day express services will jump 4 percent, while international shipping will increase 3.9 percent.

The Atlanta-based package delivery giant also is increasing the fee for residential deliveries a nickel, to $1.10. The fee for air express deliveries to homes will be $1.10 higher than the charge for taking those packages to businesses.

UPS also said it is retaining a 1.25 percent temporary fuel surcharge it began charging in August 2000 because of ``continued fuel price volatility.''

UPS still considers the surcharge temporary because it has not rolled the fee into regular rates and will eliminate it ``when we're covering our costs,'' spokesman Steve Holmes said.

Rival FedEx Corp. uses an indexed fuel surcharge on express deliveries, with the same 1.25 percent charge on ground shipments.

``We're still operating in an unpredictable fuel market,'' he said. ``We're still hopeful that these prices are going to stabilize at lower levels.''

The rates take effect a month earlier than normal because customers wanted the rate changes to be more closely aligned with their budget planning, UPS said.

In trading Friday on the New York Stock Exchange, UPS Class B shares rose 32 cents to close at $51.32.


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