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When the "Detroit Boys" absolutely, positively had to get drug money to their
suppliers, they sent it via "X-Daddy" -- code for FedEx Corp., king of the
overnight-delivery industry and the preferred service of the cocaine ring that ran at
least 12 crack houses in Minneapolis.

To pay drug suppliers, the dealers regularly bundled piles of cash into FedEx packages
in 1995 and 1996 and let the express carrier take it from there. For less-urgent
shipments, the Detroit Boys used "Pri-Daddy," the U.S. Postal Service's slower-moving
Priority Mail. Until the gang was busted four years ago, it was known not only for its
shipping savvy, but also for wrapping enemies it thought had cheated the group in
duct tape and beating them.

In recent years, drug traffickers across the country have leapt enthusiastically onto
the New Economy bandwagon of supply-chain efficiency, motivated by the speed and
dependability of express-delivery services and increased law-enforcement pressure on
airlines and other forms of transport. "I wasn't going to put it on the plane with me,"
says Maurice Clark, a Knoxville, Tenn., drug dealer who nevertheless was arrested and
sentenced last year to 87 months in federal prison after sending roughly four pounds
of cocaine in two shipments through United Parcel Service Inc.

Divided Loyalties

The trend has fueled a conflict, reaching as high as the office of U.S. Attorney
General Janet Reno, between law-enforcement agencies around the country and big
express-delivery services over just how much the companies and the Postal Service
should help police. After a string of run-ins with police over access to its clients'
packages, UPS began requiring warrants before allowing police to search packages.
And the Postal Service still won't let outside law-enforcement officials inspect
outbound international mail.

The tension between police and delivery services highlights a broader debate about
privacy and law enforcement as telecommunications companies, Internet service
providers, banks and other institutions amass huge electronic databases about their
customers' activities. Among the prominent examples: "Carnivore," the Federal Bureau
of Investigation's new software system for performing court-ordered wiretaps at ISPs,
which has prompted strong criticism from privacy advocates. For their part, the big
parcel carriers, particularly FedEx and UPS, operate elaborate digital information
systems that compile troves of data about all the packages they carry -- in all, about
8% of the country's economic output at any moment.

Express-delivery services are "the best way to smuggle dope," says San Diego police
detective Steve Sloan, who uses an eight-year-old Labrador retriever named Alvin to
sniff out drugs at package-handling facilities in southern California. "Pick any night at
random, and we can seize anywhere from 50 to 200 pounds ... and sometimes higher."

U.S. Customs Service drug seizures from express-delivery parcels ballooned to 970 in
1999, from 69 in 1996, and the amount of drugs seized from the U.S. mail by postal
inspectors jumped 22% last year alone, reaching 15,436 pounds. The seizures involve
dozens of different criminal organizations. And despite those big numbers,
law-enforcement officials say, most of the drugs and drug money flowing through the
system still goes undetected.

The Postal Service and private carriers such as FedEx and UPS insist that this is a
business they don't want. The carriers also say that the use of their delivery networks
by drug dealers is tiny compared with the amount of drugs hauled by trucks, cars,
boats and human couriers, and that the spike in drug seizures at least partly reflects
the companies' vigilance in helping police spot suspicious packages.

Taking Umbrage

The four giants of the U.S. express-delivery industry -- UPS, FedEx, Airborne Freight
Corp. and DHL Airways Inc. -- and the Postal Service won't talk in detail about their
security procedures, citing concerns that doing so might reveal drug-detection
secrets. Privately, though, industry officials bristle at the suggestion that they have
become major players in the drug business or aren't cooperative enough with drug-law
enforcers.

UPS trains its 68,000 brown-uniformed drivers to look for suspicious packages. FedEx,
based in Memphis, Tenn., has mustered a global army of more than 500 security
personnel whose duties include scouring its fleet of air freighters and trucks for drugs,
while DHL, the U.S. affiliate of Brussels-based DHL International Ltd., relies on more
than 100 security officers. Postal officials point out that they seized $12.8 million in
drug money during the past two years.

Drug dealers like the express-delivery services for many of the same reasons that
law-abiding customers do -- delivery is fast and reliable, and customers can track
their packages. A drug-courier ring busted in New York earlier this year entered its
tracking numbers at the Web sites of Airborne, DHL, FedEx, UPS and the post office to
determine when the deliveries would arrive at John F. Kennedy International Airport.
Under current postal rules, drug dealers also can mail a foreign-bound letter holding
roughly $200,000 in cash without much worry that it will be intercepted.

Law-enforcement experts say the increase in use of high-speed deliveries by drug
dealers started in the mid-1990s. A string of stepped-up investigations and new police
techniques had rattled many dealers and their human drug couriers. Some were
particularly spooked by the new antiterrorism practice, prompted by the 1996 crash of
Trans World Airlines Flight 800, of quizzing airline passengers about their carry-on
luggage, police say.

As police noticed more drug shipments entering delivery systems, federal Drug
Enforcement Administration offices around the country began negotiating local
guidelines with private carriers over how the companies would handle suspicious
packages. FedEx in 1993 reached one of the first agreements, promising to notify the
DEA anytime the overnight-delivery giant intercepted a shipment of at least 500
pounds of marijuana or 500 grams of cocaine. FedEx says the aim of the agreement,
which was in essence copied later in other areas of the country, "was to try to bring
some clarity and discipline to the process."

Sluggish in Richmond

Still, tensions flared as drug agents around the country began more aggressively
scrutinizing shipping companies. In 1997, the U.S. Attorney in Alexandria, Va.,
accused UPS of slowing down an investigation into a cocaine-dealing gang in
Richmond by refusing access to suspicious packages at a critical point in the
investigation. "UPS was not as cooperative with the interdiction efforts of the
law-enforcement community as it could be," says James B. Comey, lead prosecutor in
the U.S. Attorney's Richmond office, which eventually prosecuted more than a dozen
dealers in the case. UPS declines to comment on the matter.

Several months later, state and local police showed up unexpectedly at a UPS
package-handling facility in Cincinnati to look for drugs, angering UPS officials. In
response to incidents like that one, Atlanta-based UPS issued new guidelines in May
1998 that sharply restricted police access to its parcel-handling facilities, according
to an internal company memo. The rules required police to get a search warrant or
subpoena to search any suspicious item, to make appointments to search for drug
packages and to stay out of the way of UPS employees.

UPS refuses to lend uniforms or delivery trucks to undercover agents, as does FedEx
except in rare circumstances, making it harder for police to arrest dealers after they
receive a drug shipment. Seattle-based Airborne, on the other hand, often provides
uniforms and trucks to law-enforcement officials, while DHL, based in Redwood City,
Calif., occasionally lends uniforms but not delivery vehicles.

"There is no consistent policy, or there is no policy at all, so guys don't know what to
expect day to day," says Clayton Searle, a former Los Angeles police detective who
now leads a nonprofit police-training organization called the International Narcotics
Interdiction Association.

Customs officials became so frustrated that they started to air their complaints
publicly. In a presentation at an air-cargo conference near Washington in 1998, Phil
Metzger, a high-ranking Customs Service official, described an ominous surge in drug
seizures from private carriers and suggested that express-delivery companies
appeared to have become a top choice for drug dealers.

'Copious Efforts'

The Air Courier Conference of America, an industry trade group with a board of
directors that includes UPS and FedEx executives, fired back. James A. Rogers,
chairman of the group's international committee, sent a letter to Customs that said
any "assertion that the increased drug seizures are evidence that the express industry
is now the preferred conduit for drug traffickers is a huge jump to a very wrong
conclusion." The drug-seizure increase, he said, was the result of "copious efforts" by
carriers to work with law enforcement. "At the very least, we believe a public apology
is in order," Mr. Rogers demanded in the letter.

He didn't get one. Instead, top Justice Department officials suggested to Attorney
General Reno in early 1998 that she convene a working group from officials at the
DEA, the FBI, the Postal Inspection Service, FedEx, UPS, Airborne, DHL, the Emery
Worldwide Airlines unit of CNF Inc. and state and federal prosecutors to discuss a
coordinated, nationwide approach to interdicting drug movements. A key element
promoted by some of the law-enforcement officials, according to a top
postal-inspection official, was to give law enforcement access to the private
databases of the big shippers.

That was a particularly thorny proposition for FedEx and UPS, which have spent
fortunes to build the information systems needed to orchestrate their clockwork
deliveries. Each package moving through their systems -- about 18 million a day
combined -- is hit by electronic scanners at least a half-dozen times during even a
short journey within the U.S. As a result, at any instant, the companies' computers
can zero in on the exact locations of items in transit and the history of other
shipments by the same sender or to the same recipient.

The private-sector delivery companies -- but not the Postal Service -- are required to
supply Customs agents with an electronic record of delivery-manifest information on
all international shipments destined for the U.S. Customs officials then use their own
computers to check for clues of drug smuggling hidden in the addresses, descriptions
of contents and other data about each package. A box speeding via FedEx, for
example, toward the same address as a previous package nabbed by a drug-sniffing
dog usually will be flagged by the computer. And agents may inspect any international
package on a private carrier without a search warrant.

But the private carriers aren't required to provide the same data to law-enforcement
agencies about packages being shipped within the U.S., and all foreign-bound Postal
Service shipments are exempt from scrutiny without a warrant. Postal officials say the
law is clear: Mail is just as protected from warrantless searches as someone's house.
"There is a delicate balance between defending the borders and protecting the
privacy rights of our citizens," says Kenneth Newman, deputy chief in the Postal
Inspection Service's criminal-investigations unit. The Postal Service currently is
fighting draft federal legislation that it claims would allow Customs to freely search
mail leaving the U.S.

In the meetings of the Justice Department task force last year and early this year,
which weren't attended by Ms. Reno, officials from the express-delivery companies
insisted that they must walk a similarly fine line, even though the constitutional
protections of the mail don't apply to them, according to people who attended the
sessions.

A Legitimate Crush

FedEx, UPS and other package-delivery companies acknowledge that it's largely up to
them whether parcels in their systems are searched, but the companies insist that
there is a limit to how much they can cooperate with police while still delivering the
crush of legitimate parcels that flood their systems every day. UPS requires warrants
but won't comment on whether other parts of the policy it issued in 1998 remain in
force. DHL says it usually requires a warrant from local or state police but not from
federal agencies.

In the end, the Justice Department backed away from the proposal to tap private
databases, concluding that any such effort might further complicate relations with the
companies. "We didn't want to turn an army of FedEx people into policemen," a senior
Justice Department official said.

For their part, the companies promised to be as cooperative as possible without
violating the privacy of their customers. After the talks, Justice Department staffers
recommended to Ms. Reno that no national interdiction agreements be pursued, and
she agreed, according to Justice Department officials. The task force hasn't met since
then.

In May, federal law-enforcement officials at a House criminal-justice subcommittee
hearing said relations with the big package carriers had improved. Only the Postal
Service was sharply criticized because of its continuing refusal to let overseas mail be
opened without a warrant. FedEx was praised for tipping off police in 1998 to a huge
marijuana-trafficking organization that allegedly included more than 20 FedEx drivers
and other employees, including a security officer at a FedEx facility at Pier 40 in
Manhattan. The resulting investigation led to more than 100 arrests and the April
breakup of a drug ring that smuggled about 120 tons of marijuana.

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