International shipping news

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https://www.freightwaves.com/news/us-to-leave-global-postal-union-next-month-barring-last-minute-action-exit-could-send-global-parcel-rates-soaring

Barring an eleventh-hour agreement, the U.S. Postal Service (USPS) will leave the Universal Postal Union (UPU) on October 17, ending 144 years of U.S. involvement in the international body that governs the exchange of mail and postal parcels between countries, and perhaps fundamentally changing the landscape of global air shipping.

Members of the 192-member United Nations body will gather on September 25 and 26 in Geneva, Switzerland in only the third “extraordinary Congress” in UPU history. The key agenda item will be to vote on what UPU is calling the “possible revision of small packet remuneration rates,” which is the core issue to determine the future of U.S. involvement.

The U.S. State Department, which is the lead negotiator for the U.S. in UPU, has submitted a proposal that would allow the U.S. to “self-declare” international postage pricing and to decide on subsidy levels, if any. Unless the UPU agrees to the proposal by a September 30 deadline, the U.S. will leave the Union 17 days later and, over time, begin a framework of bilateral negotiations with individual postal authorities. The self-declare regime would begin in 2020.

The practical effect of the exit of the U.S. would be a rate increase of at least 300 percent on postal parcel traffic to the U.S. from heavy net exporting countries as rates kept artificially low for decades begin to normalize, according to Matthew White, a strategist for iDrive Logistics, a consultancy working with customers to prepare contingency plans for the possible U.S. exit. U.S.-based international shippers will also pay more, at least over the short-term, because USPS will cancel negotiated service agreements (NSA) covering international shipments if the withdrawal takes place, White said.

Private sector parcel carriers may see a huge bump in business due to new-found pricing competitiveness, while high-volume traffic may migrate to cheaper ocean shipping services because of the large price increases, White predicted. The future of the UPU, which was founded in 1876, might be at risk if the U.S. leaves the multilateral regime and migrates to a self-declare structure and bilateral relationships, according to White.

President Trump telegraphed the departure in an August 2018 memorandum, saying that certain “current international postal practices in the UPU do not align with United States economic and national security interests.” President Trump’s memorandum raised concerns with two practices. One is the inability of foreign postal services to furnish advance electronic shipment data, which U.S. Customs and Border Protection (CBP) needs to improve its ability to flag and detect high-risk shipments, as well as facilitate import flows.

The other, and more politically charged, issue is with the UPU’s 50-year-old “terminal dues” structure, which are the funds paid to the postal authority of the destination country by the authority of the origin country. The 1969 UPU Congress adopted the current terminal dues system, which governs cross-border delivery of packages and letters weighing less than 4.85 pounds. Instead of basing terminal dues on the actual handling costs incurred by the destination country’s operator, the UPU established a “country classification” system factoring in different stages of member states’ economic development and the many variations in their mail volumes, tariffs and cost levels. As a result, developing countries enjoyed relatively low shipping rates into the U.S. Meanwhile, the U.S., with its highly advanced market, would typically pay more.

The Trump Administration has argued that the terminal dues regime has led to significant price distortions that have left the U.S. at a competitive disadvantage for decades. For example, a 4.4-pound parcel shipped from China to the U.S. could cost less than a domestic shipment shipped between, say, New York and Detroit, according to those who have followed the issue.

What’s more, the terminal dues system was formed when China was very much a developing country with little, if any, economic influence on the world stage. Over the decades, China has grown into the world’s second-largest economy but continues to pay postal rates associated with that of a developing country, the Administration has argued.

The Administration has not singled out China as a factor behind its threat to exit the UPU. However, it can be deduced that, in light of the escalating trade turmoil between the two countries, its actions were meant to send another in a series of messages about China’s alleged gaming of the global trade system. Changing the status quo by adopting a self-declare approach, or leaving the UPU entirely and negotiating on a bilateral level, would level the playing field between the two countries, according to supporters of the Administration’s efforts.
In a 2015 report, the USPS’ Inspector General found that the low terminal dues for China “benefit China Post and Chinese online retailers in the lightweight, low-value package segment at the expense of [USPS] and American retailers.” This report estimated that the terminal dues structure cost USPS approximately $300 million from 2010 to 2014. According to the Postal Regulatory Commission, the independent agency that rules on postal rate proposals, the loss to USPS attributable to terminal dues reached $134.5 million in fiscal year 2016 and $170 million in fiscal year 2017.
Chinese companies ship many low-cost, low-value shipments to the U.S. via the postal infrastructure. Beijing may retaliate if it views the U.S. action as another step in ratcheting up the broad trade dispute, White said.

The USPS did not respond to a request for comment. In a June 19 memorandum announcing the possible departure, Giselle Valera, USPS’ executive director of continuity of global operations, said the quasi-governmental agency “fully supports the objectives of the Administration to secure a more balanced and fair remuneration system for small packets containing goods.”
USPS wants to establish agreements with foreign posts to continue exchanging mail if the U.S. exits, Valera wrote, adding that “it intends to use commercial logistics partners for deliveries abroad.”
The Administration is within its rights to withdraw from the UPU, according to Eliot Kim a Juris Doctorate candidate at Harvard Law School. Writing in October 2018 in “Lawfare,” Kim said Article 12 of the UPU Constitution explicitly allows any member state to withdraw from the organization with one year’s notice. In addition, the administration can act without Congressional approval, Kim said, citing language in the landmark 2006 Postal Accountability and Enhancement Act that gives the Secretary of State “power to conclude treaties, conventions and amendments related to postal services and other international delivery services,” Kim wrote.

Mark Solomon
Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.
It seems that USA members shall complete their highly wanted swaps/purchases as soon as possible....
Medieval sets for swap:https://en.numista.com/forum/topic140941.html

My personal list of scammers from Numista: erniemix, yvain, CassTaylor
Crisis averted?
https://www.cnbc.com/2019/09/25/postal-compromise-close-as-us-pushes-global-mail-reforms-amazon-fedex-impact.html
Kayla Tausche, CNBC:
The Universal Postal Union agreed to a compromise Wednesday that would allow the United States to set its own inbound postage rates and remain within the organization the Trump administration had previously threatened to leave.
After rejecting a handful of earlier options, more than half the 192-country body voted in favor of “option V,” which will allow the US to raise prices for packages arriving from other countries, in exchange for a contribution into the Union’s “voluntary fund,” which covers security and pensions. Other countries can also adjust prices on US inbound packages next July and on packages from elsewhere by set amounts each year.
“By remaining in the UPU, the United States retains its important leadership role in the global postal system,” says Kate Muth, executive director of International Mailers Advisory Group, which includes Amazon and eBay. “Mailers and shippers will see no interruption in service through the critical holiday season and beyond.
Jean-Paul Forceville, the chief negotiator for France’s La Poste, told CNBC earlier that the probability was “pretty high” that a compromise would be reached this week to reform the 144 year-old organization along some of the lines the United States has proposed.
The White House has been pushing to raise—or, in postal jargon, “self-declare”—the rate it charges other countries to deliver their packages. Peter Navarro, leading the White House delegation in Geneva, says that a higher barrier to entry would shift demand from cheap goods produced in and subsidized by China to higher-quality goods produced in the US.
“Donald Trump is taking action to address this disparity, which costs the USPS and American consumers millions of dollars each year,” Navarro wrote in the Financial Times this month.
To effect the changes as soon as possible, the White House triggered a one-year withdrawal process in late 2018. The UPU convened an “extraordinary Congress” this week to address the US’s proposals or risk its withdrawal—and a full-scale disruption of the global mail system.
“I think we know why we are here,” said the Kenyan delegate from Posta Kenya, without referencing the United States.
The Trump administration’s grievances center on one portion of the mail calculus called terminal dues - the negotiated rate a member government can charge another country when packages under 4.4 lbs arrive on its shores. On Tuesday, the UPU rejected the White House’s preferred approach: Allowing all countries to set their own rates immediately.
But the US—along with France, Canada, Japan and others—are now working on a “multi-speed” compromise that would allow these rates to fluctuate on a set schedule.
Higher prices ahead - but for whom?
The bulk of the changes would apply to letters and packages, under 4.4 lbs., sent internationally. While a relatively small subset of global commerce, it captures military mail, absentee ballots, retail catalogs, trade journals and light e-commerce purchases.
As a result, both US importers and domestic businesses reaching non-US customers could see costs rise, says Merry Law, president of WorldVu.
“The US consumer would certainly see a higher outbound package price. For inbound packages, a foreign company might indeed just say, ‘We’re going to have to charge a delivery charge,’” Law tells CNBC. “I already know mailers who are making other plans.”
For that reason, companies like eBay, Etsy, Amazon and Alibaba have raised concerns about the impact, either directly to White House officials or through industry groups.
“We will have our sellers’ backs regardless of the outcome and work to implement a solution to that they can continue serving buyers around the world,” Etsy’s head of global shipping, Roman Sobieri, said in a statement to CNBC.
The shift may drive more consumers to purchase from dollar and discount stores, and drive more shipping volume to express carriers like FedEx, UPS and DHL, US officials say. Commercial air carriers may see less cargo space taken up by USPS deliveries, Law says.
Already, shippers are working to address the issue. Stamps.com 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.
A January 2019 white paper by the Council of Economic Advisers highlighted “distortions” that exist in the system but did not estimate the impact of the forthcoming changes.
US officials would not share internal projections of where the White House believes prices would go, and prices negotiated between UPU countries are done so privately.
In response to a request for information about changes in cost, Peter Navarro sent CNBC an interview with longtime FedEx lobbyist Jim Campbell in which Campbell suggested US terminal dues would rise 125% to 180%. Other estimates, according to industry executives like Law, suggest terminal dues could rise up to 600%.
Leveling the playing field
The organization that will see the greatest impact will be the US Postal Service, whose annual finances ebb and flow depending on what it pays other countries and what it receives in return from them for its services.
A spokesperson for the US Postal Service provided CNBC a statement in support of the administration’s actions but declined to answer whether the organization would lose money - or be forced to pay a fee - to level the playing field.
Under the agreed compromise, the US and any other country that decides to self-declare rates immediately will pay a total $40 million annually into the organization to fund initiatives like security and the organization’s pension. The plan services the roughly 200 full-time employees of the multilateral organization, three of whom are American.
Forceville told CNBC there was no compromise deal without a fee for a country’s privilege of setting its own rates. A second participant in talks says the group had previously discussed an annual payment of $10 million into the organization.
“The Administration deserves credit for taking leadership on addressing a global, economic distortion that was affecting trade,” says Clete Willems, a partner at Akin Gump and former White House trade negotiator. “That should be weighed against any minimal cost of preserving the UPU system.”
The Administration’s move is backed heartily by the National Association of Manufacturers (which believes US producers will see higher demand); the US Chamber of Commerce (which believes US producers will see higher demand); and the express carriers themselves.
UPS and FedEx representatives provided statements in support of the move, but declined to speculate on the impact to their business. Three participants in talks confirmed that, if government-backed postal services become more expensive, private carriers’ prices will appear more competitive.
“What we’re going to do is make the USPS option more consistent with the rest of the market,” one White House official told CNBC. “It might benefit FedEx and UPS, but not at the expense of USPS.”
CNBC’s Stephanie Dhue contributed to this report.
Quote: "Grinya"​It seems that USA members shall complete their highly wanted swaps/purchases as soon as possible....
​My understanding (admittedly not a perfect one) is that the rates to ship FROM the US to other countries will not change much (it is already very expensive). It will also not “materially” change shipping rates TO the US from (for example) G7 countries.

What it will do is make shipping TO the US from other previously less developed countries more expensive.

I do not know what it will do to shipping rates from Russia to the US....so let’s get in as many trades as we can in the meantime. :D

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