United Parcel Service Inc. (UPS), the world's largest package delivery company, on Friday announced higher 2006 rates for most of its U.S. small-package services.

The company, whose shares were up in early trading, raised rates for its commercial ground service by 3.9 percent, and air and international services will increase by 5.5 percent.

UPS also recalibrated the index used to determine its air fuel surcharge, reducing it by 2 percent but keeping the cap at 12.5 percent. The Atlanta-based company said the reduction will benefit customers as fuel prices moderate.

In October, UPS raised the cap on its fuel surcharge for air shipping to 12.5 percent from 9.5 percent in response to surging fuel prices in the aftermath of Hurricane Katrina.

The air fuel surcharge applies to UPS Next Day Air, UPS 2nd Day Air and UPS 3 Day Select and international services. The surcharge index calculation for UPS Ground remains unchanged and is pegged to fluctuations in the Energy Department's On-Highway Diesel price, UPS said.

There will be no changes to most UPS retail rates offered at more than 4,000 locations. Other pricing changes include an increase of 25 cents and 35 cents, respectively, for the residential surcharge on UPS ground and air services, the company said.

UPS said it begins charging for undeliverable packages after three delivery attempts. Delivery Confirmation and Signature Required deliveries each will increase by 25 cents per package and Adult Signature Required will rise by 50 cents.

UPS shares rose 24 cents to $77.06 on the New York Stock Exchange.