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Postal Remuneration Boring but Important

UPU Postal Remuneration is Boring but Important

Another meeting of the UPU on postal remuneration of terminal dues occurred April 9th. Most likely, you didn’t hear about it. Often times the UPU is not that interesting, but whats happening now could change eCommerce and the global economy for years to come. The UPU (Universal Postal Union) coordinates postal policies of 192 countries. The UPU uses postal remuneration to help developing countries by subsidizing more prosperous countries with terminal dues. As a result the wealthier countries pay a higher share of the costs. Countries are placed in nine different categories based on their level of development. The rates developing countries pay are usually far lower than rates paid by domestic shippers in more developed countries. In some cases, terminal dues are so low that that developed countries like the U.S. actually lose money on mail sent to them internationally from less developed countries like… China?

The USPS is Subsidizing Chinese eCommerce

The UPU categorizes China as a developing country entitling them to huge international postal discounts. China is however, the world’s largest exporter and the second largest economy in the world. The deluge of eCommerce packages from China is costing the USPS, Canada Post, and other international postal services too much. Mail services for small packages shipped from China to the US cost significantly less than what USPS charges American mailers for a domestic service. At the same time, local companies are losing business because they cannot compete with the subsidized postal costs their Chinese competitors benefit from.

The U.S. Will Leave the UPU

The United States must find the UPU Postal Remuneration boring too. Last Year, the U.S. informed the UPU of its decision to withdraw effective 1/1/2020. No doubt, this got the attention of the UPU. An extraordinary postal congress happened September of 2018 with a second meeting this week and another scheduled this September. If a resolution is not found, the US would unilaterally set postal rates for packages entering the United States or increase tariffs again. The postal services and local businesses of countries continue to lose money on eCommerce packages from AliBaba, Ebay, Wish, etc. The USPS loses about $1 on every eCommerce package arriving from China. If a resolution is not found, the impact to the postal systems of the world and global trade will suffer. Imagine the largest economy in the world setting the postal rates of their biggest competitor.

Another Boring UPU Meeting that will Impact the Global Economy

Again, there was another boring UPU meeting this week. So what happened at the meeting? In short, not enough. There are three options being weighed by 192 countries with a vote coming this September. First, allow member countries to self-declare postal rates. Second, accelerate rate increases already approved by the UPU. Finally, the third option that also adopts self-declared rates as its basis, but with elements aimed at mitigating undue price impacts. The next postal remuneration meeting planned September 23-24, impacts every country.  Leaving the UPU now has many unknown consequences. For the USPS, leaving the UPU means negotiating individual postal agreements with every country in the world. That’s a logistical nightmare, in a boring sort of way. 

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Postal Remuneration Boring but Important

UPU Postal Remuneration is Boring but Important

Another meeting of the UPU on postal remuneration of terminal dues occurred April 9th. Most likely, you didn’t hear about it. Often times the UPU is not that interesting, but whats happening now could change eCommerce and the global economy for years to come. The UPU (Universal Postal Union) coordinates postal policies of 192 countries. The UPU uses postal remuneration to help developing countries by subsidizing more prosperous countries with terminal dues. As a result the wealthier countries pay a higher share of the costs. Countries are placed in nine different categories based on their level of development. The rates developing countries pay are usually far lower than rates paid by domestic shippers in more developed countries. In some cases, terminal dues are so low that that developed countries like the U.S. actually lose money on mail sent to them internationally from less developed countries like… China?

The USPS is Subsidizing Chinese eCommerce

The UPU categorizes China as a developing country entitling them to huge international postal discounts. China is however, the world’s largest exporter and the second largest economy in the world. The deluge of eCommerce packages from China is costing the USPS, Canada Post, and other international postal services too much. Mail services for small packages shipped from China to the US cost significantly less than what USPS charges American mailers for a domestic service. At the same time, local companies are losing business because they cannot compete with the subsidized postal costs their Chinese competitors benefit from.

The U.S. Will Leave the UPU

The United States must find the UPU Postal Remuneration boring too. Last Year, the U.S. informed the UPU of its decision to withdraw effective 1/1/2020. No doubt, this got the attention of the UPU. An extraordinary postal congress happened September of 2018 with a second meeting this week and another scheduled this September. If a resolution is not found, the US would unilaterally set postal rates for packages entering the United States or increase tariffs again. The postal services and local businesses of countries continue to lose money on eCommerce packages from AliBaba, Ebay, Wish, etc. The USPS loses about $1 on every eCommerce package arriving from China. If a resolution is not found, the impact to the postal systems of the world and global trade will suffer. Imagine the largest economy in the world setting the postal rates of their biggest competitor.

Another Boring UPU Meeting that will Impact the Global Economy

Again, there was another boring UPU meeting this week. So what happened at the meeting? In short, not enough. There are three options being weighed by 192 countries with a vote coming this September. First, allow member countries to self-declare postal rates. Second, accelerate rate increases already approved by the UPU. Finally, the third option that also adopts self-declared rates as its basis, but with elements aimed at mitigating undue price impacts. The next postal remuneration meeting planned September 23-24, impacts every country.  Leaving the UPU now has many unknown consequences. For the USPS, leaving the UPU means negotiating individual postal agreements with every country in the world. That’s a logistical nightmare, in a boring sort of way. 

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Leaving the UPU Universal Postal Union

The USA is Leaving the UPU (Universal Postal Union)

The White House announced it is leaving a 144 year old global postal agreement due to the current trade war with China. China benefits from significantly lower postage costs thanks to a decades old agreement to help poor and developing nations with lower postage rates. China is now the second largest economy in the world, and China should no longer be classified as a poor or developing country. Something must be done to level the playing field, but leaving the UPU only stands to isolate the US.  Many other countries, including all US allies, are facing the same inequities and are working with the UPU to negotiate fair terminal dues. With the US withdrawing, China now has one less party voting for a fair deal.

Leaving the UPU May Severely Damage the USPS

For the USPS, leaving the UPU would mean negotiating individual postal agreements with 190 countries. The US withdrawal from the UPU gives the USPS 12 months to do that. Negotiating on our own rather than collectively with other countries would likely lead to higher export prices. It’s a logistical nightmare waiting to happen, and the USPS will bear the brunt of it. The USPS has been losing money delivering below-cost items from China, but it may get worse. They may lose the international business altogether to private delivery companies like FedEx and UPS. These private companies were influential in the White House’s decision to withdraw from the UPU. The private companies already have negotiated rates in place to take shares of the multi-billion dollar business. They stand to benefit at the expense of the United States Postal Service.

Trade War with China

Leaving the UPU may just be another threat in order to garner attention to an ongoing issue, the trade war with China.  The White House has been withdrawing the US from international agreements at an alarming rate. (NAFTA, The Trans-Pacific Partnership, The Iran deal, Treaty of Amity, The Paris Climate Accords, UNESCO, International Coffee Agreement, Intermediate-Range Nuclear Forces treaty …) New agreements have been made with small concessions, and newly established agreements are the same long standing agreements branded differently. Perhaps this will be another aggrandizing move that changes little or nothing, but there is a lot at stake.

One Year to Create New Postal Agreements

Withdrawing from the UPU will take a year. This is not enough time to create 190 bilateral postal agreements with all the countries of the world, but it is certainly enough time, along with our allies in the rest of the world, to negotiate fair terminal dues with China. Withdrawing from the UPU will only benefit a few large private delivery companies (UPS, FedEx, DHL.) The costs to US businesses that ship overseas, US consumers, and the USPS are too great to risk. The US is one of the founding members of the UPU, a union of nearly every country in the world that has benefited billions for 144 years. Leaving the UPU now has many unknown consequences, and it only stands to benefit a small amount of people. Diplomacy is the best solution for America. Along with our allies, we need to negotiate a better deal.

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UPU Postal Congress

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Leaving the UPU Universal Postal Union

The USA is Leaving the UPU (Universal Postal Union)

The White House announced it is leaving a 144 year old global postal agreement due to the current trade war with China. China benefits from significantly lower postage costs thanks to a decades old agreement to help poor and developing nations with lower postage rates. China is now the second largest economy in the world, and China should no longer be classified as a poor or developing country. Something must be done to level the playing field, but leaving the UPU only stands to isolate the US.  Many other countries, including all US allies, are facing the same inequities and are working with the UPU to negotiate fair terminal dues. With the US withdrawing, China now has one less party voting for a fair deal.

Leaving the UPU May Severely Damage the USPS

For the USPS, leaving the UPU would mean negotiating individual postal agreements with 190 countries. The US withdrawal from the UPU gives the USPS 12 months to do that. Negotiating on our own rather than collectively with other countries would likely lead to higher export prices. It’s a logistical nightmare waiting to happen, and the USPS will bear the brunt of it. The USPS has been losing money delivering below-cost items from China, but it may get worse. They may lose the international business altogether to private delivery companies like FedEx and UPS. These private companies were influential in the White House’s decision to withdraw from the UPU. The private companies already have negotiated rates in place to take shares of the multi-billion dollar business. They stand to benefit at the expense of the United States Postal Service.

Trade War with China

Leaving the UPU may just be another threat in order to garner attention to an ongoing issue, the trade war with China.  The White House has been withdrawing the US from international agreements at an alarming rate. (NAFTA, The Trans-Pacific Partnership, The Iran deal, Treaty of Amity, The Paris Climate Accords, UNESCO, International Coffee Agreement, Intermediate-Range Nuclear Forces treaty …) New agreements have been made with small concessions, and newly established agreements are the same long standing agreements branded differently. Perhaps this will be another aggrandizing move that changes little or nothing, but there is a lot at stake.

One Year to Create New Postal Agreements

Withdrawing from the UPU will take a year. This is not enough time to create 190 bilateral postal agreements with all the countries of the world, but it is certainly enough time, along with our allies in the rest of the world, to negotiate fair terminal dues with China. Withdrawing from the UPU will only benefit a few large private delivery companies (UPS, FedEx, DHL.) The costs to US businesses that ship overseas, US consumers, and the USPS are too great to risk. The US is one of the founding members of the UPU, a union of nearly every country in the world that has benefited billions for 144 years. Leaving the UPU now has many unknown consequences, and it only stands to benefit a small amount of people. Diplomacy is the best solution for America. Along with our allies, we need to negotiate a better deal.

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UPU Postal Congress

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Extraordinary Postal Congress

UPU Extraordinary Postal Congress

The Universal Postal Union is holding an Extraordinary Postal Congress in Addis Ababa, Ethiopia this week. This may have a drastic impact on international eCommerce. The UPU coordinate rates and standards between every national postal system, and has been a vital to international structure since 1874. Crucial reforms are needed for terminal dues if the US is going to be able be competitive in both global and domestic eCommerce.

Terminal Dues

The UPU uses a system to help developing countries by subsidizing more prosperous countries with terminal dues. As a result the wealthier countries pay a higher share of the costs. Countries are positioned in nine different categories based on their level of development. The rates developing countries pay are usually far lower than rates paid by domestic shippers in more developed countries. In some cases, terminal dues are so low that that developed countries like the US actually lose money on mail sent to them internationally. The Extraordinary Postal Congress meeting may result in significant changes to how some countries are positioned.

China Has an Unfair Advantage

The UPU categorizes China as a category three economy entitling them to huge international postal discounts. China is however, the second largest economy in the world. This allows Chinese retailers to undercut American retailers by very wide margins. The Chinese economy is benefiting at the expensive of US retailers and the United States Postal Service. The USPS loses an estimated $1 on every small package that arrives from China. In Fact, mail services for small packages shipped from China to the US cost significantly less than what USPS charges American mailers for a comparable service.

The Cost to American E commerce and the USPS

Terminal dues on items from China to the US average $1 per Kilogram. As a result, USPS received less compensation for a China Post package moved from a Los Angeles port to its final destination inland, than it would have from someone in Los Angeles who sent an identical package within the United States. Costing the China Post less than the price of a U.S. stamp. Conversely, it is far more expensive to send a similar package to China. The Extraordinary Postal Congress gives us an opportunity to change China’s unfair trade advantage with the US.

UPU Can Influence Fair Trade

The Extraordinary Postal Congress convened in an effort to reform the UPU. Just 1 of 192 countries invited is the US. This give us a small voice in a big crowd. It is vital the we work with our allies to influence the UPU to categorize China as the developed country that it is. Finally this would create fairer trade between China and the rest of the developed world.

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International Mail Consolidators

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Extraordinary Postal Congress

UPU Extraordinary Postal Congress

The Universal Postal Union is holding an Extraordinary Postal Congress in Addis Ababa, Ethiopia this week. This may have a drastic impact on international eCommerce. The UPU coordinate rates and standards between every national postal system, and has been a vital to international structure since 1874. Crucial reforms are needed for terminal dues if the US is going to be able be competitive in both global and domestic eCommerce.

Terminal Dues

The UPU uses a system to help developing countries by subsidizing more prosperous countries with terminal dues. As a result the wealthier countries pay a higher share of the costs. Countries are positioned in nine different categories based on their level of development. The rates developing countries pay are usually far lower than rates paid by domestic shippers in more developed countries. In some cases, terminal dues are so low that that developed countries like the US actually lose money on mail sent to them internationally. The Extraordinary Postal Congress meeting may result in significant changes to how some countries are positioned.

China Has an Unfair Advantage

The UPU categorizes China as a category three economy entitling them to huge international postal discounts. China is however, the second largest economy in the world. This allows Chinese retailers to undercut American retailers by very wide margins. The Chinese economy is benefiting at the expensive of US retailers and the United States Postal Service. The USPS loses an estimated $1 on every small package that arrives from China. In Fact, mail services for small packages shipped from China to the US cost significantly less than what USPS charges American mailers for a comparable service.

The Cost to American E commerce and the USPS

Terminal dues on items from China to the US average $1 per Kilogram. As a result, USPS received less compensation for a China Post package moved from a Los Angeles port to its final destination inland, than it would have from someone in Los Angeles who sent an identical package within the United States. Costing the China Post less than the price of a U.S. stamp. Conversely, it is far more expensive to send a similar package to China. The Extraordinary Postal Congress gives us an opportunity to change China’s unfair trade advantage with the US.

UPU Can Influence Fair Trade

The Extraordinary Postal Congress convened in an effort to reform the UPU. Just 1 of 192 countries invited is the US. This give us a small voice in a big crowd. It is vital the we work with our allies to influence the UPU to categorize China as the developed country that it is. Finally this would create fairer trade between China and the rest of the developed world.

Next PostAtlas International Mail to Canada

International Mail Consolidators

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