Shipping not expected to be e-commerce Y2K issue

If any Year 2000 computer problems slow down the e-commerce industry, the shipment of packages is unlikely to be a culprit.

Package delivery services such as Federal Express, United Parcel Service (UPS) and the U.S. Postal Service will handle the millennium date change--and millions of boxes--in stride, leaving Internet retailers with little to fear, according to analysts and industry executives.

Although most electronic commerce companies, having only been founded in the past few years, are largely Y2K compliant, they are reliant upon outside distribution services to deliver their packages, exposing e-commerce companies such as Amazon.com, eToys and Egghead.com to a potential source of customer complaints. But the shipping companies have spent millions readying themselves for the millennium. FedEx has spent $109 million to eradicate millennium bug problems within its systems, while UPS expects to spend at least $101 million.

"From everything we know so far the big players, such as FedEx, UPS and the U.S. Postal Service, they're all up to snuff for Y2K," said Alan Mak, a retail sector analyst at Argus Research, an independent equities research firm. "It's not going to be a problem."

The so-called Year 2000, or Y2K, bug is a date-related programming flaw that could cause computers to malfunction or fail after Jan. 1. As the end of the millennium neared, many technology experts feared some computers would recognize 2000 as the year 1900 instead, causing major problems and service outages. But increasingly there are signs that the Y2K concerns may be overblown.

The positive Y2K predictions are good news for some online retailers, which have seen their stock prices slip following what was expected to be a major Christmas shopping season boost. Some analysts have raised concerns about the order fulfillment capabilities of some e-commerce sites, which already have had their share of glitches in the past year.

Online retail giant Amazon.com ships roughly 60 percent of its books, CDs, and other goods via U.S. mail, with UPS picking up much of the rest of the slack. But the company isn't concerned about whether its customers will get their packages in the next millennium.

"We feel confident that our vendors are going to deliver, and we have no reason to believe otherwise," said Amazon spokesman Bill Curry.

The optimism may stem from the efforts delivery companies have made to avoid Y2K problems.

FedEx has had 4,000 people working on Y2K-compliance since it established its Year 2000 project office in 1996, according to FedEx spokesman Cornell Christion. "We've completed inventory of all our [information technology] systems and renovation and testing of these systems is substantially complete," Christion said.

Similarly, UPS begin preparing in 1995. "From a readiness perspective, we're ready. We're expecting business as usual come Monday," said UPS spokesman Malcolm Berkeley.

"The Postal Service began looking into the year 2000 problem in 1993, and will be ready for the date change," reads a message on the USPS Web site.

Analysts believe overseas shipments could be the source of some Y2K-related mishaps, but the majority of e-commerce revenue is still U.S.-based, making the international exposure limited.

"More of the concern lies overseas," Argus' Mak said. "For some of the smaller online retailers who don't inventory their own goods, or for those with very complex supply chains, there lies a risk."

Still, analysts and industry executives are confident e-commerce companies, and the shipping firms they depend on, will deftly handle the Y2K date change.

Mak added: "I honestly think the worst thing that will happen is maybe a traffic light turns off."