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Sun Aug 26 2018 12:45:55

President Trump Tackles Cheap Postage for Foreign Sellers

By: Ina Steiner

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President Trump ratcheted up pressure on the Universal Postal Union (UPU) which sets rates - known as "terminal dues" - for cross-border deliveries among its 192 member countries, which includes the US. In a memorandum on Thursday, he issued what could be seen as an ultimatum for the UPU to change the system soon, or else.

UPU terminal dues have come under fire as sellers and manufacturers in some countries, such as China, can mail small packets to US shoppers for extremely low rates, giving them a cost advantage over domestic sellers.

As we explained in this 2015 article, UPU classified China as a "transitional" country, meaning less industrialized, and therefore it paid lower terminal dues than "target" nations such as the US.

The President's directive to the Secretary of State on Thursday included statements that will likely appeal to online sellers as well as large shipping carriers UPS and FedEx, such as telling the Secretary to seek terminal dues rates that "avoid a preference for inbound foreign small packages containing goods that favors postal operators over private-sector entities providing transportation services."

The State Department, which is responsible for negotiating UPU terminal dues, had indicated that the latest UPU terminal dues rate change that took effect on January 1, 2018, saw sellers in China paying 13 percent more when mailing small packets to US shoppers, but the process of moving toward what the US sees as more equitable rates has been slow. 

However, the UPU, which meets every four years, has recognized that it must move more quickly. It is meeting next month at an Extraordinary Congress - only its second ever - where reform will be high on the agenda, "with a view to improving and speeding up decision-making processes within the organization and ensuring its financial sustainability." Included on the agenda: whether to meet every two years instead of every four.

In his August 23 memorandum, President Trump told his Secretary of State to notify the Director General of the UPU of the policies and intentions of the United States outlined in the memorandum and to submit a report by November 1st containing recommendations for future action if sufficient progress on reforms was not being achieved. 

Those recommendations, President Trump said, should include the possibility of adopting self‑declared rates, an unprecedented move.

One postal expert told us that if the US adopts self-declared rates, "it would hardly spell the end of the international postal service into or out of the US."

But there are many who would like to see the privatization of the US Postal Service, and it seems possible that disrupting USPS agreements with other countries might further that agenda.

The President himself created a task force in the spring to recommend whether the USPS should be converted into a privately-held corporation. The Task Force report was due on August 10th but has yet to be revealed to the public.

The State Department responded to the Presidential Memorandum on Friday saying the US delegation to the UPU Second Extraordinary Congress next month would "follow through on the President's directive to make clear that UPU rates of postal reimbursement are unfair to United States merchants, mailers, and businesses. The delegation will also take steps to update unfair rates of reimbursement and ensure that all UPU member nations take action to furnish advance electronic customs data to facilitate the detection of shipments of opioids and other illicit materials. The United States looks forward to working with other UPU members to accomplish these goals."

Impact on eBay and Amazon
eBay has taken advantage of terminal dues to enter into multi-lateral agreements with US and foreign postal services to create ePacket rates favorable to sellers in multiple Asian countries exporting to the US. eBay's latest service to move Chinese goods to the US and Europe is called SpeedPAK, a joint venture with Orange Connex Holding, though we're not clear on whether that service relies on postal services for any part of delivery.

Amazon has spoken out against cheap ePacket rates and is also is advocating for a strong postal service, joining the recently created group called The Package Coalition whose goal is to “work proactively with policymakers and the public to highlight the importance of the postal package delivery services to American businesses and consumers."

Online and marketplace sellers may not be happy with cheap rates for international sellers stemming from the UPU terminal dues system, but if that system is disrupted too much, we see no guarantee it won't eventually lead to their own costs of receiving inventory from abroad or sending orders overseas skyrocketing. And as they know all too well, larger merchants have more negotiating power than smaller sellers.

UPDATE 8/30/18: The UPU responded to the president's memorandum. 



Comments (59) | Permalink

Readers Comments

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This user has validated their user name. by: toolguy

Sun Aug 26 13:04:47 2018

This has been a long time coming!

Obama did nothing about this, at least Trump see's it as being an important issue to US sellers

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by: sasikat9 This user has validated their user name.

Sun Aug 26 13:26:11 2018

I wouldn't hold my breath on this one. We have a better chance of paying 1.00 to mail a letter in the US than we do of ever having what would be considered fair costs for epackets.

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This user has validated their user name. by: Marie

Sun Aug 26 13:45:09 2018

While I'm very pleased to hear we might be moving in the right direction with a bit of pushing by POTUS, I'm optimistically cautious too.  This is a complicated issue no matter how simplistic others may want it to seem.  It is NOT just how it significantly affects online sellers.  It is much much more complicated.

Changes absolutely need to be made, but in a way and timeframe that does not disrupt or put USPS in a position of potentially being privatized.  However that could be the ultimate goal here and we all need to be aware of this.  

Don't let the idea of giving us a more level playing field with the Asian sellers cloud your judgement.  While absolutely important we must look at the larger picture too.  What does this mean down the road for us too is very important?

I like the idea of faster decisions and cutting the process in half is a great start.  It will be very interesting to find out what comes out of the next meeting.

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This user has validated their user name. by: Number 6

Sun Aug 26 14:52:45 2018

Marie
"Changes absolutely need to be made, but in a way and timeframe that does not disrupt or put USPS in a position of potentially being privatized."

Changes need to be made NOW - not way off in the distance.

1. In our sphere of selling, the same item shipped to me from China can go epacket rate for a few dollars.  If I ship the exact same item or one just like it to China, the cheapest rate is between $20 and $25, and similar rates to other countries.  Shipping abroad is so overpriced now that we barely get any international orders, when once we had hundreds, so the USA loses out on exports massively now, which brings money into the country.

We are therefore subsidising incoming packets from China, and we can't remotely compete with it - a level playing field is all that is asked for - NOW, not next year, not way off in the distance, because we may very well be out of business before some decisions get made.

2. Amazon has a deal with the USPS that benefits AMAZON, not the post office, and they, a private business, are using the USPS to subsidise their 'prime/free shipping' and lower ther costs of its business.  They are not paying the real cost of delivery on Sundays, and when I see our Sunday mailman drive by crammed with Amazon branded packages I once again see why our our small businesses cannot compete, because we can't offer free delivery at the postage rates we have to pay.

It would be great to keep the USPS what it is, but right now it is used by a few large private enterprises and some, one in particular, nation, to achieve lower rates subsidised by WE the poor saps who pay all this postage each day to USPS.  

Oh, and don't even get me started on how much of my mailing costs goes towards current and future USPS pension liablities...money I could be putting into my own pension fund...

If USPS can't be modernised and not continue to be used and abused by a few big businesses and China, then, well, sod it, let it get privatised.  Once it is a business, like Fedex and UPS, it'll have to charge competative but profitable rates, internally and internationally - there'll be no epacket rate then.

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This user has validated their user name. by: toolguy

Sun Aug 26 14:57:42 2018

$2.66 to send a 4oz. package across the street (for US sellers)

Under $1 to ship a package 8000 miles (for chinese sellers)

I'm looking at a swivel base camera mount, I can get it from china for $1.85 with free shipping. . .How can this be? https://www.ebay.com/itm/Mini-Ball-Head-for-1-4-Bracket-Holder-Screw-M
ount-Tripod-360-Swivel/323283390024

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by: dander This user has validated their user name.

Sun Aug 26 14:58:59 2018

the epacket thing from China needs to be fixed. Something is wrong when it costs less to ship an item overseas than across town

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This user has validated their user name. by: Marie

Sun Aug 26 15:02:08 2018

@Number 6

Yes that certainly would make all of us very happy for now.  But not every change has a positive return in the long run.  You have to look beyond today.

I absolutely agree, change needs to happen and VERY soon.  But structured in a way that does not put USPS at risk for future increases on US shipments, international shipments from the US and potentially setting up USPS to be privatized.  It ALL has to be taken into consideration.  We may want to make a complex subject simple, but that doesn't mean it is.  And to do so it to put your future business at risk.

There will be much debate on this subject and it is needed, especially by those that can actually affect change.

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This user has validated their user name. by: Ina

Sun Aug 26 15:12:57 2018

Something to think about: the cost of domestic USPS Priority Mail vs shipping carrier rates. If you're a small-business / low-volume seller, are you going to get UPS or FedEx rates that a national retailer gets if current PM rates disappear? That's not to say it's inevitable, but it's something to keep a very close eye on.

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This user has validated their user name. by: Marie

Sun Aug 26 15:15:59 2018

Thank you Ina.  That further denotes how complicated and far reaching this problem really is.

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by: extremetm This user has validated their user name.

Sun Aug 26 15:27:21 2018

Getting real sick of subsidizing China every 6 months when USPS does ANOTHER rate increase.

Giving a communist country special treatment over it's own citizens borders on treason.

I applaud Trump for addressing this.

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This user has validated their user name. by: Ina

Sun Aug 26 16:12:00 2018

Remember what terminal dues accomplish: if you want to send a letter to your grandmother in Italy, you pay the USPS to get it to Italy, but the Italian postal service isn't going to deliver it unless they get compensated.

And vice versa when your grandmother replies! The United States Postal Service wants to be compensated by Italy.

192 countries work together as part of the UPU to set rates for delivering mail they receive from other countries - terminal dues. Imagine that 192 countries have figured out a way to work together up to this point.

Thanks in part to cheap electronics (and now drugs) that can be sent in small-packets, the issue has become complicated.

But I still want to be able to send my aunt in Ireland a letter by purchasing a stamp at my local post office!

Let's fix the problem, but let's not throw out the baby with the bath water.

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by: DingDong This user has validated their user name.

Sun Aug 26 16:46:26 2018

***  UPU classified China as a "transitional" country, meaning less industrialized  ****

W H A T ????

**  Look how much crap they produce and doesn't follow regulations ( made with lead, fakes, melamine and so on)
**  So much unregulated manufacturing that it's so polluted that they were masks from the pollutants.
**  Some Chinese try to save money so they can buy food from USA because food grown there has contaminates from the ground and air.
**  China is industrialized.

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by: RL15 This user has validated their user name.

Sun Aug 26 17:27:46 2018


I would be glad to see all made in china junk banned from importing to the u.s

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This user has validated their user name. by: Number 6

Sun Aug 26 18:42:31 2018

Terminal rates and agreements are one thing, but the fact that the very same item in the same package can be shipped from China to USA for a few dollars, but costs $15-20 or more to ship it from the USA to China, is completely wrong and anti-American, it has a detrimental effect on the livelihoods of Americans and their businesses.

It's OK to be Anti-American, not everyone likes America, we can live with that, that's the burden and joy of having a democracy and freedom of speech, but it is not OK to be Anti-American when you are the United States Postal Service.  

What next? An Anti-American Army/Navy/Air Force/Coast Guard, working on the cheap for China and not the USA?

It's funny how half a decade ago even the suggestion of supporting communism in America brought the wrath of (admittedly over-zealous) Senators, yet here we are today, SUBSIDISING, and make no mistake, it is Americans with every mailing they undertake, SUBSIDISING mailing from communist state-run un-democratic China to the USA.  

It wouldn't be so bad if we were subsidising engineering merchandise from, say, Germany, or well-made and designed Italian clothing, British hi-fi components, quality products...but to subsidise the nasty, cheap, badly made, dangerous and sometimes poisonous garbage being shipped by the minute from China to the USA in epackets?  

Why?

No one else is paying for it.  Just Americans via their own shipping costs at the post office.  Which is why sending the same item within the USA costs three times+ as much as it costs the sender from China to mail it to the USA.

As I said before, a level playing field is all that is being asked for.  That, and the USPS to operate in the INTERESTS of Americans and not other nations.

Otherwise, just sell the whole darn USPS to Amazon (they probably won't even want it) or China, and be done with it - let them find out how much it really costs to ship items.

As for: ' UPU classified China as a "transitional" country, meaning less industrialized'

Holy Moly - China is at the height of its Industrial Revolution, it is where England was in the 1800s..it sure isn't an 'transitional', it 'transitioned' from a rural, agrarian state run economy to a state-run industrial nation decades ago.


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by: maxmad This user has validated their user name.

Sun Aug 26 20:10:26 2018

I agree changes are needed, but it's complicated, the main culprit is china, they are now a rich country, but as Ina mentioned it can hurt others,

China is tricky they ship from many other countries that disguise / fake their real origin.

it's not as easy as just increasing costs across the board,

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by: Vernfern This user has validated their user name.

Sun Aug 26 20:53:15 2018

As much as I cringe at the ePacket rates and the unfair advantage China sellers have, I think they needs to be carefully weighed out. What is obvious up front might not be so clear in the long run and for all parties who feel they are being cheated.

I have to wonder if the ePacket rates when up (but did not vanish) and a good US business package rate came into play that was aimed at the smaller eCommerce seller.

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This user has validated their user name. by: Rexford

Sun Aug 26 21:12:43 2018

There is another side to this equation.  Many folks who own retail stores and ecommerce stores in the USA order Chinese made products and benefit from these epackets.

Like it or not, we all buy these products, at least from time-to-time.  When retailers have to pay higher prices for shipping charged by the Chinese vendors, they'll add those costs onto the products that we buy.

I agree that it is not a level playing field for USA sellers, but it will affect the price of goods being imported into the USA.

I chuckle when I think of Trump tackling anything outside of a Twitter feed.  My guess is that he likely doesn't know what an epacket is. Someone in the Trump administration yes, but Trump, no.

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by: pace306 This user has validated their user name.

Sun Aug 26 22:48:25 2018

What will happen to poor old eBay and Devil Wenigs dream of world domination (through cowardice and stupidity) if the epacket rates gets "fixed"?

What will he report on that next quarters report?

I applaud POTUS for trying to fix this issue - call me to watch eBays Titanic finally hit that iceberg - its been a long time comming!

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by: Carol Is Here This user has validated their user name.

Mon Aug 27 00:25:27 2018

Wall Street was very insistent on being the middlemen for cheap Chinese junk flooding into the U.S. and wiping out American small and medium business.

Again, they defined how the U.S, system operates, for their own interests.

Wall Street hates small business, no matter how much they claim otherwise. They want control.

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by: Carol Is Here This user has validated their user name.

Mon Aug 27 00:27:55 2018

"UPU classified China as a "transitional" country, meaning less industrialized"

Wall Street asked, and their wishes were delivered by the UPU lol.

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