The Universal Postal Union, in an Extraordinary Congress, has given the United States the go-ahead to raise postal shipping rates on packages under 4.4 pounds, and end a break that gave international firms a big advantage over domestic companies in moving small-item packages.
As reported in the March 5, 2018 issue of HomeWorld Business, the rate international shippers paid for delivery using the United States Postal Service for goods arriving in America was substantially less than those paid by domestic shippers of the same-weight small-packaged goods over the similar and even lesser distances within the country.
The UPU congress resolved that beginning in July 2020 the USPS can begin setting foreign inbound small-package shipping rates up to 70% of retail domestic rates, according to sources following developments, effectively eliminating the differential. This has the practical effect such that foreign shippers will pay the same rates as U.S. shippers for postal delivery to consumers. If necessary, the rate can escalate to 80% in the coming years.
Other countries can raise rates over five years.
The key reason the U.S. got extraordinary treatment is that the majority of shipping that took advantage of the rate breaks was into the U.S. The result not only was unfair competition but also a stream of counterfeit goods shipped directly from overseas, especially China, into the U.S.
Jayme Smaldone, CEO of Mighty Mug, began to alert the housewares industry of the international small package problem rate a few years ago, and he’s getting credit for encouraging the U.S. government to address what was becoming a more critical issue as e-commerce has evolved and expanded.
In considering the UPU decision, Smaldone told HomeWorld Business, “I think it’s great. I think it’s about as good a deal as they can get at the negotiating table.”
Smaldone discovered that Chinese factories were copying the Mighty Mug and then shipping the counterfeit products into the U.S. at rates considerably less than he could get from the Postal Service for sending the real thing across the neighborhood where it was manufactured. After discovering this, he began a campaign within the housewares industry and the U.S. government to have the rate issue addressed and effectively blocked a conduit that made selling the counterfeit goods so lucrative.
“The biggest change could be reducing counterfeits on a global level,” he said. “The UPU ultimately did the right thing to fix this.”