Today, the United States reached a landmark agreement with members of the Universal Postal Union (UPU) to renegotiate the terminal dues structure and therefore avoiding a potential US pullout from the UPU.
The UPU, a global organization that coordinates postal policies and shipping rates for 192 member countries, gathered for only the third Extraordinary Congress in UPU’s 145-year history, opted for a compromise under the looming threat of a US pull out.
Last October, it was announced that the US planned to withdraw from the UPU unless the terminal dues framework underwent dramatic reform. The framework was created to promote trade for countries with developing economies, but given that it was created over 50 years ago, it has become dated, favoring many nations that are no longer considered “developing.” Critics have argued that inbound delivery costs should mirror domestic shipping rates to create consistency between domestic and international merchants. By eliminating terminal dues, self-declared rates would become a system that would allow nations to set their own prices for delivering inbound mail.
What Is the New Proposal That Was Approved?
In the new proposal, member countries will be able to set a rate for inbound shipments to be at a threshold of approximately 70% of domestic rates. Many believe this will alleviate a legacy pricing structure that puts domestic businesses and shippers at a disadvantage. The new rates will take effect in mid-2020, although some nations may implement rates over a five year period to avoid shock. Countries that receive mail from the US can also then charge reciprocal rates for delivery of US mail and shipments.
What This Means For Online Sellers
While this new agreement could mean a gradual increase on export prices, a complete pullout of the UPU would have been far more damaging. Many sellers will be able to absorb these costs over time. Stamps.com recently launched a new product, GlobalPost, to try to give comparable prices to what they can get from the USPS.
“We’re acutely aware of the impact this could have on our customers, our customers do ship internationally quite a bit, and we want to ensure they have seamless access to those markets,” said Jeff Carberry, Stamps.com CFO.
For domestic sellers, the US is now able to charge what many argue will be more competitive rates, removing the pressure that many US domestic shippers feel today from large importers. While we wait to see how the rate increases will impact the USPS, this is largely a win for online sellers.