"It's difficult to securely deliver packages in high-density, multi-family urban residences, especially when people are not at home," said Jerome Roberts, vice president of global product innovation at UPS.

The partnership with Latch - a New York City-based startup that has raised $26 million in private funding - enables UPS drivers to open entry doors with a handheld device that has a different access credential for each building on a route. Every time a driver enters a building, Latch creates a traceable record.

Derek Banta, UPS's director of global product innovation concepts, said the parcel delivery company will assess the potential cost savings from "completing more deliveries on the first attempt."

UPS, the world's largest package delivery company, and rival FedEx Corp have invested billions of dollars to upgrade their networks to handle surging demand for e-commerce deliveries. Residential deliveries typically cost more than business deliveries because drivers usually drop more packages per stop at offices than at homes.

FedEx told Reuters it began testing smart lock technology in select markets before the winter holiday shipping season last year. FedEx declined to identify the test markets or its smart access technology partner.

Latch a year ago teamed up with Walmart Inc's Jet.com e-commerce site to test its technology at 1,000 residential buildings in Manhattan and Brooklyn. Walmart also made waves in September when it started dropping packages inside homes - or groceries inside refrigerators - as part of a test with August Home smart lock customers in Silicon Valley.

Amazon.com late last year announced a secure-lock service called Amazon Key that enables Amazon Logistics delivery workers to briefly unlock a customer's door to drop a package inside.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Leslie Adler)

By Lisa Baertlein