UPS to Charge by Size for Ground Packages

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/ Source: Reuters

United Parcel Service Inc, the world's biggest package delivery company, said it will start charging by size of packages for all ground services in the United States, as it looks to offset rising fuel costs.

Rival FedEx Corp announced a similar pricing plan along with an increase in fuel surcharge in May.

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UPS' new pricing, which will be implemented from Dec. 29, will also include packages to Canada, the company said.

UPS already charges by bulk, in addition to weight, for air shipments.

The logistics giants have been struggling with high oil prices, which jumped to nine-month highs last week as concerns mounted that escalating violence in Iraq could disrupt oil supplies.

The new pricing will add to shipping costs for online retailers such as Inc and eBay Inc as they will have to pay more to ship items that are bulky, but not necessarily heavy, such as diapers and large soft toys.

"The 49 cent toy that's 3 feet tall and requires a big box probably doesn't get shipped anymore," Sanford Bernstein analyst David Vernon told Reuters.

UPS said the change in pricing would reduce overall package sizes and the use of excess packaging materials, leading to lower fuel use, vehicle emissions and transportation costs.

-- Reuters