Express Interest.

Internet business opens new markets for fast-freight companies.

ON THE ELECTRONIC SIDE, Internet talk these days is all about volume--broadband, big pipes, massive global relays. For e-commerce, the lifeblood of the new economy, the world is shrinking.

Overnight shippers like Federal Express, UPS and DHL say their customers big and small increasingly tailor orders to meet their personal needs, including how and where they receive their products. Suppliers are adjusting to accommodate them.

"The old economy was driven by the big supplier," says Alan Amling, director of electronic commerce for UPS. "They created and shipped goods en masse and in bulk. Manufacturers are trying to become more flexible, to reduce their inventory, to make smaller and more frequent shipments. We want what we want, when we want it, and cheaper."

Enter the express-package companies, which have long carved a livelihood out of handling package shipments, single items usually less than 70 pounds. To gain ground in an expanding market, many companies--including UPS, FedEx and DHL--have formed special divisions to handle logistics and e-commerce. FedEx, long the business world's document shipper, is responding by tramping through UPS turf by adding home deliveries, extended driver hours and other services. "We've started to take advantage of the opportunities," says FedEx spokeswoman Sally Davenport.

The express companies and other business-to-business transportation providers are also revamping their services to cash in on e-commerce sales, which analysts see growing annually from 50% to 100%.

Selling goods electronically is one thing. But packaging, shipping and tracking them, as well as getting paid for them and allowing for merchandise returns and exchanges--in other words, the logistics--well, that's a different story. Most electronic retailers, especially the new dot-com breed, simply do not have assets and resources.

That's why the express-package companies have formed special divisions to handle logistics and e-commerce. But they're doing more than that. The companies are integrating their systems with those of their major customers, making it even easier to track shipments. The express shippers say they can now help customers examine their logistics chain, find ways to streamline the process and make it all more efficient.

"We are trying to give our customers and their markets every chance to be able to handle the Internet and e-commerce," says Christian Collin, who tackles Internet development and related issues for DHL's Americas operations.

Software salvation. To help cope, DHL Worldwide Express recently launched a software package, DHL Connect, which provides country-specific customs and currency information throughout Latin America, in English, Portuguese and Spanish.

Collin says that the complexity of the software package requires constant communications and upkeep by DHL and the shipper because DHL's programming is integrated with that of the client. The target market is DHL's larger customers.

Another key to making the new systems work is teaming with the right partners. UPS, FedEx and DHL, for example, have struck deals with many retail Web sites. The glue that holds the alliances together is software that integrates the partners' systems, so freight companies have aligned themselves with top software developers. UPS and FedEx, for example, offer programs for companies to build their own Web sites through the express freight deliverers' Internet sites, incorporating special logistics software to make shipping easier. DHL has a similar package in the works.

Then there are crossover partnerships that help capture even more market share. Take the case of Ferguson Inc., a Virginia-based home products distributor with a subsidiary in Puerto Rico. The company has a contract with Xerox to run Ferguson's mailroom. Xerox, in turn, has a contract with UPS to handle the shipping.

Of course, none of this matters if customers don't have computers, a potential problem in Latin America. UPS has started a computer-leasing program to help some of its customers enter the new e-commerce economy. DHL's Collin says his company is developing a similar program.

"Only about 4% utilize the Internet in Latin America," says Richard Camejo, UPS international vice president for the Americas region. "But the region has 400 million people--what an opportunity."