Online Orders Boosting Shippers’ Holiday Take

On Prancer! On Blitzen! On FedEx!

The boom in online shopping and other electronic commerce--flourishing as never before this holiday season--is becoming an added source of revenue for the outfits that deliver all those goods, such as FDX Corp.’s FedEx, United Parcel Service of America Inc. and the U.S. Postal Service.

Most major retailers and catalog firms have Web sites, along with the burgeoning companies that do business only on the Internet, including bookseller Amazon.com and auctioneer Onsale Inc.

“It’s absolutely had a significant impact on our business,” said FedEx spokesman Greg Rossiter.

U.S. online retail sales this holiday are expected to triple to $2.55 billion from $800 million last year, according to the market research firm Yankee Group. The number of U.S. households shopping online will likely grow to an estimated 8.8 million this year from 5.2 million a year ago, the firm said.

Yet even though the shippers feel the effect of e-commerce on their operations, they’re hard-pressed to quantify the impact on their bottom lines. None of the big carriers said they could put a precise dollar amount on their added online business, mainly because they don’t yet have the ability to track what portion of their customers’ sales come via the Internet.

For instance, when UPS delivers a box of shirts ordered from Lands’ End Inc., it might be an order that the customer would have made anyway via a toll-free telephone call had the Internet not existed. Hence, it’s hard for UPS to determine if that Internet sale is, indeed, an incremental sale.

“People think that because they ship some books with Amazon.com that FedEx’s earnings are going to improve, and that’s just not the case,” Rossiter said.

The carriers can somewhat gauge the impact by the amount of action on their own Web sites, which help businesses and their customers coordinate orders and deliveries of goods. But that only goes so far.

“When packages come through our system, one is not stamped ‘e-commerce’ and one is not stamped ‘traditional purchase,’ ” UPS spokesman Steve Holmes said. “I have not yet found anyone who could put a number on what the actual increase is” from Internet transactions, he said.

Also, “we don’t have separate divisions that just handle the shipping we do that’s related to the Internet,” Rossiter said. “It’s all woven together.”

And for now, online shopping shipments are still a relatively small part of UPS’ overall operation, which gets immense during the holiday season. Atlanta-based UPS will ship nearly 300 million packages between Thanksgiving and Christmas alone, and its annual revenue exceeds $22 billion.

Online-shopping packages “could take a fairly good jump, and we would just absorb it,” Holmes said. Even with the success of, say, Amazon.com, “it’s going to take a number of those [online retailers] to really make a large blip on the screen in terms of volume.”

Regardless, investors are wild about most any stock related to the Internet these days, and so shares of FedEx’s parent company shot higher Monday after the financial weekly Barron’s noted that FedEx, based in Memphis, Tenn., will continue to benefit from e-commerce.

FDX gained $4.75 a share, to $72, in composite trading on the New York Stock Exchange, and Airborne Freight Corp.--which operates rival Airborne Express--added $1.25 a share, to $30.13. UPS is privately held.

The postal service, meanwhile, also is “seeing a boost” in its parcel service because of the Internet, but likewise hasn’t been able to break out the amount of added business, spokesman Norm Scherstrom said.

“We are seeing a healthy growth in parcel post [deliveries], but when we get something from Lands’ End or Nordstrom or L.L. Bean, we don’t know if the order came over the Internet” or via conventional means, he said.

FDX founder and Chairman Fred Smith has said for some time that the Internet would boost his company’s fortunes, but FedEx executives told Barron’s that it’s anyone’s guess at this point how much e-commerce is adding to revenue at FedEx and the other shippers.

But FedEx--which specializes in overnight deliveries--claims that it leads the market for delivering time-sensitive, business-to-business shipments ordered over the Internet, while conceding that UPS leads the market for online business-to-consumer deliveries.

Many businesses order raw materials, supplies and other goods they need over the Internet, and FedEx believes that business-to-business shipments comprise a much bigger share of Internet transactions, on a dollar basis, than online consumer shopping.

“These are boxes filled with hundreds of thousands, if not millions, of dollars worth of manufacturing, computer or medical equipment,” Rossiter said, though he couldn’t quantify those market shares either.

“Perhaps at some point,” he added, “that will be possible.”