Everything You Need to Know about the Current UPU and USPS Situation

Posted on Sep 18, 2019 By jhofkamp Share:

There is a very high possibility that the United States Postal Service (USPS) is planning to withdraw from the UPU.

Whoever said shipping is easy hasn’t heard about the latest Universal Postal Union (UPU) changes. There is a very high possibility that the United States Postal Service (USPS) is planning to withdraw from the UPU on October 17, 2019 after 144 years with this international organization. This means global parcel rates could soar.

First, what is the UPU?

Established in 1874, it’s the second oldest international organization worldwide. It consists of 192 member countries with the primary goal of cooperation between postal sector players. The group sets the rules for international mail exchanges and makes recommendations to stimulate growth in mail, parcel and financial services volumes. It also does its best to improve the quality of service for customers worldwide.

Why is USPS withdrawing from the UPU?

Two reasons:

  1. Advance Electronic Customs Data. The US State Department, which is the lead negotiator for the USPS in the UPU, is pushing for advanced electronic shipping data to allow Customs and Border Protection officers to better screen parcels and to flag high-risk shipments.
  2. Terminal Dues. These dues are the funds paid to the destination country’s postal authority by the origin country’s authority. Currently, the UPU’s terminal dues system is 50 years old and governs cross-border delivery of packages and letters weighing less than 4.85 pounds. It is also costing USPS millions each year. According to a 2015 report from the Inspector General of USPS, this terminal dues system has cost USPS approximately $300 million from 2010 to 2014. These costs have only continued to increase.

This large sum of money is due to how terminal dues work. Instead of assessing terminal dues by the actual cost incurred by the destination country’s postal operator, the UPU uses a country classification system to take into account different stages of each country’s economic development. As a result, terminal dues paid by the US are higher than those paid by developing countries, regardless of the cost of delivery. It is important to note that those countries that were developing at the time the system was created in 1969 are still considered “developing countries,” even if they have since become developed.

What does this mean for you?

Unless the UPU agrees to a revision of its agreement by September 30, 2019, USPS will leave the UPU 17 days later. This will most likely lead to huge rate increases on parcels coming to the US from heavy net exporting countries, like China. Even US-based international shippers could be paying more due to USPS canceling negotiated service agreements (NSA) that cover international shipments, according to Matthew White, a strategist for iDrive Logistics. The timing also isn’t great, as peak shipping season is right around the corner.

With this potential move about to make a drastic impact on the entire shipping industry, it is time to start developing a plan. But finding carriers that will offer international shipping at low rates will be difficult to find in this short time frame and with the change so near. Not to mention establishing contracts with these carriers will be tough, as we are less than a month from USPS withdrawing from the UPU. Fortunately, ProShip partners with carriers that offer alternatives to the high rates that will soon be impacting the shipping industry.

ProShip customers have access to other carriers and shipping options to ensure they receive the lowest shipping cost and best shipping method. For example, ProShip's relationship with UPS and FedEx allows customers to send everything from letters to small parcels internationally. These services are not reliant on the US' relationship with the UPU and can ensure businesses continue to ship internationally without disruption while still receiving similar transit times, customs clearances and competitive rates. DHL eCommerce is also a ProShip partner and provides international shipping for high volume shippers, and due to its worldwide shipping service, will have no disruption if USPS withdraws from the UPU.

Even with the possible changes of rates or the potential for advanced customs data, ProShip has the capabilities to guarantee there is no interruption to your business. You will have a clear idea of shipping rates, time in transit and complete compliancy no matter the shipping carriers you use. With the biggest change in the industry coming closer every day, be sure you have the tools and plan in place to continue shipping internationally and avoid dramatic rate increases.

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