Many e-commerce shippers are surprised to find out that - in most cases - it can be less expensive to bypass use a foreign post office and ship with the USPS directly.
At Jet Worldwide, we get many inquiries from shippers in Asia and Europe asking: How can it we gt cheaper to shipping from China and Europe to the USA?
Jet Worldwide help companies ensure greater durability to their "direct order/ cross border supply chain" via direct connections to major USA gateways and express consignment clearance. Contact our team to build best practices in your e-commerce deliveries to the USA and Canada: info@jetworldwide.ca
The reason for low cost delivery for cross border e-commerce parcels to the USA have to do with United Postal Union rules and the US Postal Service (USPS) wanting to remain relevant in the new era of cross border e-commerce. New UPU allow post offices to raise their "exchange rate" which has caused rate increases from in-country post offices to the USA.
- Who is the United Postal Union (UPU)?
- How the UPU determines the cost of cross border parcels to the USA?
Who is the United Postal Union / UPU and what do they have do with the USPS?
The UPU is a 100+ year old Switzerland based agency of the of United Nations with 192 national postal authorities as members.
USPS is a one of the 192 members of the UPU.
The United Postal Union provides an internationally recognized framework for countries to exchange letters - and now small parcels.
At Jet Worldwide, we believe the UPU can serve a vital role in helping ensure the universal and secure delivery of cross border parcels. Parcels serve as the physical connection in our increasingly virtual world.
What do UPU letter rates have to do with international parcels?
As letters became obsolete as a form of communications, the UPU rules for letters were transitioned and applied and to “bulky letters” / packets / small parcels. Essentially, "large letters" (i.e. parcels under 2 kilograms/ 4 pounds) are subject to an adjusted letter rate that is known as Terminal Dues.
The USPS classifies shipments subject to UPU rules as foreign treaty mail. ePackets are technically not subject to UPU rules but critics say they are still priced below cost (the details of the agreements are considered confidential competitive information by the USPS not made public).
Contact our team of consultants to help understand and develop high volume parcel import processes to the USA using duty free section 321 entries and express consignment clearance processes.
Duty free Section 321 Entry types to the USA include:
- Express consignment / ECCF
- Cargo clearance via CFS
- Type 86 ACE automated broker clearance
Transitional Developing countries as defined by the UPU
In keeping with their role of fostering international cooperation and growth, the UPU offers developing (transitional) countries lower terminal dues. These preferred rates are often below the cost of delivery.
- China is considered a transitional country by the UPU
- Preferential “terminal dues” rates for are given to transitional countries.
- Preferential transitional rates are below the cost to deliver small parcels
Transitioning away from Transitional Country
The issue of rates is beyond just China to the USA but from many countries considered "transitional" to major destinations in Europe and North America. Furthermore, much of the volume from transitional countries is actually from other countries.
Postal Authorities re-selling their lost cost access:
Postal authorities who have low cost access to the USA and Europe due to their country's UPU transitional status actually resell this access. For example, shippers in one country can route their material via low cost "transitional status" country and take advantage of below cost pricing to the USA, Europe and other higher cost destinations.
The UPU is adapting with new rules
Being a large international organization, the UPU is slow to change but has eliminated cost discrepancies and allowing major importing countries more control over pricing.
Small packets: Money losing boondoggle or historic opportunity?
There was heated debate at the last UPU conference on the merits of the small packet service. After having a secret ballot, the majority voted against killing small packets.
Maintaining low cost leadership in small packets was viewed as essential to the very survival of postal authorities. Protecting market share of the +30% growth of cross border e-commerce and small packets remains a focus of The UPU and their 192 members.
There was an acknowledgement of "cost recovery issues" (namely for small packets to the USA and Canada) and agreement on the need for future price adjustments.
With no definitive action on raising prices, the political pressure on the USPS regarding delivery of foreign treaty mail at below cost will continue.
Companies sending parcels direct to the USA must become familiar with high volume parcel Section 321 clearance processes via a Container Freight Station (CFS) or Express Consignment Clearance Facility (ECCF).
Contact Jet for information on building a secure high volume parcel import process to the USA and low cost USA delivery via USPS: info@jetworldwide.c
Political Price/ Cost Pressure on USPS:
With the often chaotic claims and counterclaims on why the USPS continues to lose billions of dollars per year, many are surprised to learn that the USPS actually prices “foreign treaty mail” at below cost. But, via Global Direct Entry and other options, shippers can pre-label their online orders to the USA with USPS labels.
- FedEx /UPS and USPS compete in the parcel delivery market
- FedEx/ UPS (and DHL) are amongst USPS largest customers for final mile delivery
- USPS is a large customer of FedEx/ UPS for air transport of mail
Customs clearance concerns for parcels
The integrity of international parcels related to their declared value and contents has been a concern highlighted by Increased - and unpredictable - enforcement actions by US Customs. Enforcement actions will likely continue to slow parcel post clearances and make transit times less dependable.
USPS has a distinct clearance process and are now required to submit shipper data.
USPS and Global Direct Entry
Through their Global Direct Entry service, the USPS is selling direct access to international shippers and forwarders. Global direct entry is an attempt to bypass UPU and fellow international post offices with a direct offer to international shippers. Packages can be sent air freight and pre-labeled with a USPS indicia and tracking number.
Jet Worldwide advises shippers and forwarders on establishing secure high volume express consignment parcel clearance for Global Direct Entry, parcel select or American domestic delivery network.
Parcel Delivery: Saving the US Postal Service
Parcel volumes have saved the USPS from financial ruin and given a new reason for existence. The USPS is generally viewed positively by the public who consider their local post offices an integral part of their community. However, this public service and universal coverage is being tested by continuing large losses related to legacy pension issues.
Jet Worldwide helps companies establish a direct connection to the USA via duty free section 321 express consignment clearance processes.
There is increasing interest in "direct order, cross border e-commerce" as the management of supply chains are exploring ways reduce costs related to duty and inventory.
- The USPS remains the carrier of choice for last mile delivery to the USA.
- Jet helps companies develop durable processes for duty free import and last mile USPS delivery.
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