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US to stay in UPU and charge higher Chinese seller postage prices

By Chris Dawson September 27, 2019 - 10:00 am

Countries attending the Universal Postal Union’s (UPU) Extraordinary Congress this week have reached an agreement on international remuneration rates for incoming mail. This sets the rates that postal carriers such as the USPS in the US can charge countries (such as China) to deliver their US bound mail and will impact Chinese seller imports into the US.

Whatever you think of President Trump, and there’s plenty there to discuss even before the impeachment news, this is a President who sets extraordinary goals and amazingly seems to achieve them. Trump looked at Chinese sellers and the volumes they’re shipping to the US paying just pennies for the USPS to deliver them and effectively said enough’s enough, they’re not paying enough. On the 17th of October the US sent notice of withdrawing from the UPU with the rider that if changes were made they would cancel the withdrawal. The threat of withdrawing from the UPU was enough to cause the UPU to take action.

What will happen now is that countries who import more than 75,000 tons of mail (based on 2018 data) would be able to opt-in to self-declare their rates as of the 1st of July 2020. 75,000 metric tons means largely the US and self declared rates means Trump achieves his goal and from summer next year can jack up what are known as terminal rates for Chinese sellers flooding the US with cheap imports. This only applies to packets under 4.4 pounds (2kg) but that does of course cover the majority of online purchases for many sellers.

At the same time the new agreement protects US sellers for their cross border sales in ways that simply withdrawing from the UPU wouldn’t do – US sellers also have their packages delivered by foreign postal carriers and the UPU regulates terminal rates for them.

The net result of this will be higher postal prices for Chinese sellers who ship to the US and in turn they are likely to have to increase their selling prices. Many Chinese sellers work on razor thing margins of just pennies so can’t simply absorb increased postage costs. The US hope is that consumers will start to shop from US retailers rather than Chinese sellers.

This will of course lead to Chinese sellers re-evaluating their business models and many will start to locate goods within the US or ship them over in bulk daily to cut costs. However then they will be paying the USPS prices on parity with domestic sellers which does, at least to President Trump, seem fair.

  • mark peterkin
    1 year ago

    Hi,

    That will impact the business model, of the shopify/aliepress dropshipping model in the usa, and cut in to the huge mark up the shopify owners make on this current model.

    But in turn hopefully better for the consumer.

  • Ifellow
    1 year ago

    This will lead to more chinese sellers focusing on Europe and the uk in particular. Sad times. The UK seemed to not even have a rep at this meeting.

    • KarlB
      1 year ago

      Couldn’t agree with Ifellow more. I have already seen a spike in “similar” product on amazon across the whole of Europe to the point we’ve upped are brand policing efforts up significantly. The problem is for every one we take down 2 pop up. The end result is the same however: the damaging of amazons precious customer experience.

  • Julius
    1 year ago

    There was a UK rep there. I have already contacted my MP to find who it was and how we can follow suit after the US to raise our prices.

    • James
      1 year ago

      Hi Julius,

      Great shout contacting your MP. Please do keep us abreast of what they say, as this affects all of us UK sellers.

      Regards,
      James

    • ifellow
      1 year ago

      Yeah good luck with finding out who represented the UK, because no one else has, its suggested it might be some from Royal Mail but no one is sure.

  • I would have thougth that the UK also imports way more then 75 000 tons per year (who knows as I don’t work for the Royal Mail, I hope that volume figure has not been choosen to just include the US, it doesn’t seem fair that if you are a small Country you can’t charge commercial rate) , commerical it’s not in the Royal Interest to continue to subsidies Chinese sellers and to start to charge them commerically viable rates. Well done Trump!!!!!!!!

  • Toby
    1 year ago

    Does anyone know what the Chinese are charged to send stuff here? I often see stuff sold at less than the cost of a small parcel… but large parcel size!

    • James
      1 year ago

      Toby, I think they get a bag rate at $10 per bag or similar. So if they can get 100 items in a bag, it’s just $0.10 per item.

      Correct me if I’m wrong, people!

      Ultimately, Royal Mail are subsidising the cost of shipping once it gets here. And that’s before we’ve even discussed the value declaration fraud that goes on.

    • ifellow
      1 year ago

      The more they ship, the more UK prices rise for mail and lets not even think about the VATfraud.

      Whole thing is a joke and HMRC should be ashamed.

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