US seems likely to leave Universal Postal Union (UPU)

[dynambee]

Perhaps slightly off topic, but probably of interest to a lot of people selling online.

The US seems likely to leave the UPU or to force through major & rapid changes to the UPU that will greatly impact the global postal shipping system. There are plenty of articles about this in Google News but it hasn't received extensive mainstream coverage yet. This one is pretty good, IMO, but have a dig around in Google News (US leaving UPU or UPU meeting are likely good search terms) to see what comes up.

This very likely (but not absolutely certain) move by the US is a double-edged sword. On one hand it will probably do a lot to stop the massive flood of ultra-cheap items being shipped individually from China. All that stuff you see on eBay for 99c with free shipping would stop pretty much immediately. That will create some demand and opportunity for domestic sellers in the US who are willing to wholesale batches of product from China for US resale.

On the other hand though anyone shipping out of the US after October 1st (and anyone like me shipping into the US) could face some major business disruption. I'm in Japan and I don't think Japan has a particularly unfair/unbalanced agreement with the USPS but I suspect prices will go up in both directions anyway.

Likewise anyone who has a business that involves drop-shipping items from China is probably going to face a LOT of business disruption.

This will likely have knock-on effects to people who are in other countries, even if you don't deal with the US at all. Depending on how things unfold the entire UPU system could end up being renegotiated, or in a worst case scenario the treaty could fall apart.

Overall it seems like something everyone here should be aware of. Not a whole lot we can do to prepare since it's not yet clear exactly how things are going to unfold. Nothing like uncertainty and potential major business disruption in the last quarter of the year. 😞

[toplakd]

The bigger efferct of that will most likely be, that shipping 1-10$ gadgets from China won't be free anymore, or 1$.

As currently delivering China gadgest is the biggest loss to all Natianal mail carriers everywhere on the world.

As per agreement, i will deliver yours for free and you will deliver mine for free. I send you 1 airplane yearly, you ship 1000 back to me 😞

Like here, we have no import taxes up to 22€ in my country and no processing fee. Over that range tax applies and about 6€ processing fee.

So people order China packages on daily basis just to be under 22€ limit. But that will soon change, as post will start charging arround 6-7€ processing fee for every single package that is comming from outside European Union. So ordering 10 small packages with low value products and free shipping will soon going to be expensive, as fee could be bigger than value of the order 🙂

[dynambee]

Sure, China has been getting a free ride for too long and that needs to change. I think everyone (besides the Chinese...) can agree on that.

The problem is that Trump is taking a sledgehammer approach to what should be treated with a scalpel. It's not at all clear how this will unfold or how this will impact everyone who mails things internationally.

[shoptechmedia]

20 hours ago, toplakd said:

The bigger efferct of that will most likely be, that shipping 1-10$ gadgets from China won't be free anymore, or 1$.

As currently delivering China gadgest is the biggest loss to all Natianal mail carriers everywhere on the world.

As per agreement, i will deliver yours for free and you will deliver mine for free. I send you 1 airplane yearly, you ship 1000 back to me 😞

Like here, we have no import taxes up to 22€ in my country and no processing fee. Over that range tax applies and about 6€ processing fee.

So people order China packages on daily basis just to be under 22€ limit. But that will soon change, as post will start charging arround 6-7€ processing fee for every single package that is comming from outside European Union. So ordering 10 small packages with low value products and free shipping will soon going to be expensive, as fee could be bigger than value of the order 🙂

Wow.. no shipping fee for that amount? Lucky for you..  well, i guess it all will even out..

 

I have to get more reading on this.. thanks @dynambee

[Factor]

It is kind of funny..  The US asked for this in the 19th century.  Now we are leaving.  The only thing it seems to do is it to calculate shipping cost based on routes and country.  It seems like we shouldn't need a big bureaucracy for that theses days.  It's also an agreement and looks like some countries don't like the agreement.

14 hours ago, shoptechmedia said:

As per agreement, i will deliver yours for free and you will deliver mine for free. I send you 1 airplane yearly, you ship 1000 back to me

Sounds like it needs to be for every item you send me it should cost X based on a standard formula.  

[lesley]

Simply put it is because the US is being led by someone that does not understand how a global economy works. Its not something we can say "opps, we messed up, lets file bankruptcy and get new backers" on. ITs trade and people's livelihoods. 

[Purity]

I think it's great we're leaving the UPU.
The rising postal rates and intense Chinese competition (mostly due to postal rates) is becoming to much for many US sellers to deal with and there's not much of an alternative.

Edited September 22, 2019 by Purity

[lesley]

I don't think our postal rates are going anywhere, especially considering the state of our postal service, they are liekly to rise again in the next couple years no matter what we do with foreign packages. But at the same time I have not heard any of my US clients be upset over chinese products coming in, but my CA clients are worried about how they will still ship here. 

[Purity]

46 minutes ago, lesley said:

I don't think our postal rates are going anywhere, especially considering the state of our postal service, they are liekly to rise again in the next couple years no matter what we do with foreign packages. But at the same time I have not heard any of my US clients be upset over chinese products coming in, but my CA clients are worried about how they will still ship here. 

Correct me if I'm wrong, but my understanding is that the USPS isn't supposed to turn a profit, and rather is supposed to be more of a 'wash', so that money either has to either go towards shipping infrastructure, reducing future postal rates, or something similar. In my opinion, all better alternatives then subsidizing other countries postage.

While I respect your experience dealing with your clients and appreciate your input, my experience has not by any means been the same and I disagree very much with your sentiments. Myself, as well as many others certainly do have a problem with cheaper (typically lower quality and often misadvertised) Chinese products coming in to compete with us at prices which we could not possibly offer because of non-comparable shipping costs.

It is particularly bad on marketplaces such as Amazon, eBay, and so forth. These places are literally being spammed with low-cost and low-quality Chinese products in many niches. And with Amazon taking nearly 50% of the USA's online market, certainly you see how these websites being literally spammed in some niches could affect conversion rates even on websites which get their traffic organically or through ads due to price checking and comparison shopping due to non-comparable shipping costs. (even if the product is lower quality and not actually comparable)

Edited September 23, 2019 by Purity

[lesley]

You are correct on the USPS making a wash, that is the idea at least. But on thing to consider is the ageing fleet that no one wants to deal with. https://www.uspsoig.gov/document/delivery-vehicle-fleet-replacement  Most people do not give it second thought, but those mail trucks that deliver the daily mail are 25 years old. https://about.usps.com/news/statements/011516.htm  Thats pretty old, when you consider they have 190k of them. Something is going to have to be done at some point. 

 

As far as cheap goods pouring in, its an amazon problem. I am not sure if you saw, but amazon got nailed on a lawsuit about them a couple months ago. Basically it was a fly by night cheap chinese good company that made leashes, someone got their eye poked out with one and amazon does not keep enough records to know who the person should sue, so the court allowed them to sue amazon. As that becomes more common place amazon will either crack down, or just die by lawsuit, so that problem will be handled. 

 

But granted, I will say, most of my clients don't have to deal with those issues because they manufacture their own products or have their own brands, so they have to deal with brand loyalty issues. 

[shoptechmedia]

On the other hand, looking at this from a neutral view, it does makes sense that the US would back out from UPU agreement.. for one thing, China's industrialization was non-existent when this agreement was signed.. but as it stands, the US move was radical, to say the least. The one who will take the big hit for this are the biggest shippers of cheap goods from outside US.

[dynambee]

9 hours ago, Purity said:

I think it's great we're leaving the UPU.
The rising postal rates and intense Chinese competition (mostly due to postal rates) is becoming to much for many US sellers to deal with and there's not much of an alternative.

Fixing the Chinese problem is necessary but leaving the UPU is taking a sledgehammer to everything. Postal rates into and out of the US are likely to skyrocket and be very unpredictable. This is not a good thing for anyone, even if you don't directly ship or receive packages internationally yourself.

[dynambee]

3 hours ago, shoptechmedia said:

On the other hand, looking at this from a neutral view, it does makes sense that the US would back out from UPU agreement.. for one thing, China's industrialization was non-existent when this agreement was signed.. but as it stands, the US move was radical, to say the least. The one who will take the big hit for this are the biggest shippers of cheap goods from outside US.

The Chinese terminal fees need to be renegotiated. The US leaving the UPU will cause completely unpredictable problems that are not at all related to China. The UPU is the one and only global postal agreement. Abandoning it because the Chinese situation needs fixing is like taking dynamite to your car because you have a flat tire. Sure, you won't have a flat tire problem anymore but now you have no car at all. It's not a good solution.

[Purity]

5 hours ago, dynambee said:

Fixing the Chinese problem is necessary but leaving the UPU is taking a sledgehammer to everything. Postal rates into and out of the US are likely to skyrocket and be very unpredictable. This is not a good thing for anyone, even if you don't directly ship or receive packages internationally yourself.

The administration said we would only leave if we/they were unable to renegotiate.

Last year, a spokesman for USPS mentioned during a statement that the USPS fully supports this move, and I'm not sure who could possibly have more data on this then the USPS.

“The current system has led to the United States subsidizing the imports of small packages from other countries. As such, the Postal Service and its Governors fully support the Administration’s decision to move to self-declared rates, and will work closely with the State Department, the Postal Regulatory Commission, and other stakeholders to implement the Administration’s decision,” - Jeff Adams, USPS spokesman

[dynambee]

6 minutes ago, Purity said:

The administration said we would only leave if we/they were unable to renegotiate.

International treaties are not negotiated or renegotiated in a matter of a few days. The Trump administration has said they will leave the UPU if things aren't negotiated to their liking in the upcoming UPU meeting which is.....two days in length. There are 192 members of the UPU and taking a dictatorial stance towards negotiations is unlikely to lead to positive results. This is international diplomacy and is something that Trump completely fails to understand. This isn't some two-bit family business deal.

No one can predict what will happen if the US leaves the UPU but it's not likely to be pretty. Let's say the US decides to unilaterally increase terminal dues by 100% on, for example, Canada. Guess what Canada is going to do in return? Yup, increase terminal dues by 100% on shipments from the US. Every country will do this. Some countries may decide to not have mail exchange between themselves and the US. This is how things operated in the days before the UPU existed and it was a giant pain in the ass for everyone.

[dynambee]

22 minutes ago, Purity said:

“The current system has led to the United States subsidizing the imports of small packages from other countries. As such, the Postal Service and its Governors fully support the Administration’s decision to move to self-declared rates, and will work closely with the State Department, the Postal Regulatory Commission, and other stakeholders to implement the Administration’s decision,” - Jeff Adams, USPS spokesman

Yes, and the USPS has also been proactively cancelling business rate discount agreements in the expectation that the US will leave the UPU from October 1st:

Quote

"We are making every effort to try to minimize any disruption that may be occasioned by this change and are working to devise solutions that promote continuity of operations, as well as alternative solutions for the future," reads an email from a USPS official to an NSA holder dated Aug. 22, 2019 obtained by Supply Chain Dive.

The email goes on to say the USPS is "giving notice of termination of the Agreement," referring to the receiving organization's service agreement, out of an "abundance of caution."

"Please note that your entity will no longer be eligible for discounted rates under the Agreement beginning on October 1, 2019, unless the Postal Service provides further notice regarding this matter to you," the email concludes.

Essentially the USPS expects mail export costs to increase dramatically from Oct 1st if the US leaves the UPU. That's bad news for US businesses but potentially good news for those of us outside the US that compete with US businesses for international sales.

[Purity]

58 minutes ago, dynambee said:

International treaties are not negotiated or renegotiated in a matter of a few days. The Trump administration has said they will leave the UPU if things aren't negotiated to their liking in the upcoming UPU meeting which is.....two days in length. There are 192 members of the UPU and taking a dictatorial stance towards negotiations is unlikely to lead to positive results. This is international diplomacy and is something that Trump completely fails to understand. This isn't some two-bit family business deal.

No one can predict what will happen if the US leaves the UPU but it's not likely to be pretty. Let's say the US decides to unilaterally increase terminal dues by 100% on, for example, Canada. Guess what Canada is going to do in return? Yup, increase terminal dues by 100% on shipments from the US. Every country will do this. Some countries may decide to not have mail exchange between themselves and the US. This is how things operated in the days before the UPU existed and it was a giant pain in the ass for everyone.

It wasn't exactly in 2 days. The USA gave the UPU the required 1 year notice last year. I respect your opinion, but I guess we simply have different opinions on the matter. I believe the USA has a strong upper hand on the matter, although of course, that may change one day. I don't believe leaving an organization is dictatorial. There is no obligation to take part in the UPU, as the required notice was already given. Waiting around for 191 other countries to twiddle their thumbs doesn't seem very decisive. They already had a year to take action and it's not like this is a new problem.

Edited September 23, 2019 by Purity

[dynambee]

1 minute ago, Purity said:

It wasn't exactly in 2 days.

The meeting is 2 days in length. There will have been negotiations leading up to the meeting but expecting a final decision during a single two-day meeting is simply not realistic. It's not impossible but it's not likely. The US trying to force terms on everyone else will also piss off a lot of people who may just decide to tell the US to piss up a rope, too.

 

3 minutes ago, Purity said:

I believe the USA has a strong upper hand on the matter, although of course, that may change one day.

Why? Because countries have no other options? You think backing other countries into corners is a good negotiating tactic?

 

8 minutes ago, Purity said:

There is no obligation to take part in the UPU

Sure, the US can leave. Other countries can jack up their rates to ship to & from the US, and some may decide not to exchange mail with the US at all. As I already explained, this is how it was before the UPU existed and it's why the UPU was created in the first place. Going back to that will not be a positive thing for the US.

I hope for your sake that none of the products you sell come from outside the USA. You may suddenly find it difficult or impossible to get stock, and what you can get may be a lot more expensive.

 

10 minutes ago, Purity said:

Waiting around for 191 other countries to twiddle their thumbs doesn't seem very decisive.

That's how diplomacy works. It doesn't move quickly, it takes time to get results. The US doesn't get to call all the shots by themselves.

[Purity]

I appreciate your input and response, but much of what you have mentioned is strictly your opinion and I don't really wish to get into polarizing arguments about whether the USA is 'backing people into corners' or 'calling all the shots'. I don't believe they are and I don't think it's fair to shift all of the blame onto the USA here. In my opinion, the USA has waited long enough for a resolution. There's many people on both sides of this argument, so perhaps we should agree to disagree. As for losing mail exchange with some few countries, that would be unfortunate, but if that does happen, I don't believe that would necessarily be the USA's fault, as the USA has mentioned they simply want fairer policies. Products can be sourced elsewhere if necessary.

[dynambee]

1 minute ago, Purity said:

As for losing mail exchange with some few countries, that would be unfortunate, but if that does happen, I don't believe that would necessarily be the USA's fault, as the USA has mentioned they simply want fairer policies. Products can be sourced elsewhere if necessary.

What I would love to see, but is very unlikely to happen, would be for the UPU to say, "Great, you guys go ahead and leave. Go it alone, good luck. No UPU member will exchange mail with the USPS until the US returns to bargain in good faith."

Most other countries understand diplomacy though so this is unlikely to happen.

[lesley]

Things might be looking up, https://www.nytimes.com/2019/09/25/business/universal-postal-union-withdraw.html 

[dynambee]

13 hours ago, lesley said:

Things might be looking up, https://www.nytimes.com/2019/09/25/business/universal-postal-union-withdraw.html 

Better than it could've gone, guess we get to wait and see how things unfold going forward.

[shoptechmedia]

On 9/26/2019 at 9:13 AM, lesley said:

Things might be looking up, https://www.nytimes.com/2019/09/25/business/universal-postal-union-withdraw.html 

Nice one.. it is just about right. US gets to set their own rates so they can compete with China, IMO this deal is fair.. I am not clear though about other nation.. am going to read more into this.

[dynambee]

9 hours ago, shoptechmedia said:

Nice one.. it is just about right. US gets to set their own rates so they can compete with China, IMO this deal is fair.. I am not clear though about other nation.. am going to read more into this.

From the look of the NYT article nothing changes at all until July of next year. At that point the US can start to set their own rates for incoming parcels. Starting from January 2021 other countries that have heavy mail volumes will be able to do the same thing.

The thing is, this might not change much with regards to shipping costs from China. The Chinese gov't may decide to just absorb the extra postal costs themselves and not pass it along to their customers as higher rates. Alternatively businesses with tight connections to the CCP may see their rates stay low while businesses with more independent leaders may see their postal rates go up.