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UPS plans Net deliveries

The world's largest package shipper is launching an online document delivery service that will encrypt and track sensitive data.

UPS, the world's largest package distribution company, is pushing into online document delivery, hoping to make inroads into the overnight letter market dominated by Federal Express.

Due to be available by July, UPS Document Exchange will offer two options for delivering documents over the Internet. UPS OnLine Dossier, building on a service UPS has been testing with NetDox, is designed for critical or confidential documents.

It uses digital certificates to verify the identities of both sender and recipient as well as encryption, confirmation of delivery, insurance for up to $100,000 in business losses, and third-party validation from accounting/services firm Deloitte & Touche, a part owner of NetDox.

UPS OnLine Courier is designed for exchanging less sensitive documents over the Internet. It builds on the Posta technology from Tumbleweed Software, which offers multiple security options, including passwords and encryption, plus tracking and confirmation that a message was received.

Although UPS has not announced pricing, NetDox delivers its service directly to companies for $5.35 for domestic deliveries, $10.70 for international transmissions.

Douglas Rockel, a transportation analyst at Furman Selz FFC, said the new products are unlikely to have a large impact on Federal Express, the most well-known brand for overnight document deliveries.

"The overnight letter business is a much, much smaller pie of FedEx than it used to be," Rockel said. "That's not where the company makes its money anymore."

"They've already lost market share over the years to the fax machine, email, and to the Internet and intranets. Their forte, their core product, is now overnight packages," he said.

"UPS has a fundamental reason for doing electronic transmission--they were late with overnight delivery, and they are right on time with electronic commerce," said Patrick Haynes, NetDox chairman, who said FedEx generates 65 percent of its revenue from overnight deliveries vs. 6 percent or 7 percent for UPS.

But UPS is using the Internet to play catch-up, tough as that is with technology-savvy FedEx. UPS, similar to FedEx, offers online delivery tracking from its Web site, and UPS has aggressively moved to let users of other Web sites track packages with a button click from those sites.

"We are faster, more secure, [and] we're more global than carriers who carry letters," Haynes said. He noted that UPS has committed more than $10 million in marketing support for UPS Document Exchange.

NetDox has focused on four vertical markets for its offering: financial services, health care, global distribution, and legal, where it has a partnership with Lexis-Nexis. Later this year, Haynes said, NetDox will add other services to move documents over the Net for as little as $2. It also will offer its clearinghouse services to companies that want to sell digital content over the Net by year's end.

Reuters contributed to this report.