International Postal Update — July 2014

U.S. EXPRESS DELIVERY SERVICES FACE BARRIERS ABROAD

The 2014 National Trade Estimate Report by the U.S. Trade Representative identified barriers it says hinder market access for U.S. express delivery companies across the globe.

In Brazil, the government charges a flat 60 percent tax on all imported express delivery shipments. That tax disadvantages foreign express delivery services, as shipments coming by regular mail generally face lower duties. In addition, Brazilian authorities cap the value of goods imported and exported via express services at $3,000 and $5,000, respectively. Those caps limit the size of the market for American firms.

In 2009, China passed a postal law banning foreign companies’ access to the “document segment” of the domestic express delivery market. China also favors domestic package delivery companies over foreign ones. For example, the Chinese government bars foreign firms from loading cargo directly onto Chinese international and domestic flights; they must instead employ a Chinese agent.

A postal bill under review in India would force private-sector express delivery services to charge twice the rate that India Post’s Express Mail Service charges for items weighing 50 grams or less and letters weighing 150 grams or less. The USTR report posits that the bill could give India Post “regulatory authority over its private sector competitors.

Indonesia restricts most foreign involvement in delivery services. Under the law, 51 percent of the company needs to be Indonesian-owned to qualify for a delivery service license. Foreign post companies are also only allowed to operate in provincial capitals that have international airports or seaports.

The USTR also “remains concerned” about competition between Japan Post and foreign express delivery firms. The report singles out customs procedures and potential cross-subsidization of competitive express delivery services by the monopoly side of the Post’s business.

CHINESE E-COMMERCE GIANT ALIBABA BUYS 10 PERCENT STAKE IN SINGPOST

Alibaba Group, the Chinese e-commerce firm expected to go public in the United States this summer, invested nearly $250 million for a 10.35 percent stake in Singpost, Singapore’s national postal service.Together, the two companies hope to set up an “international e-commerce logistics business.” Both firms are excited at the prospect of delivering products purchased via Alibaba to Singpost’s network of self-service parcel lockers.

SingPost projects the Asia-Pacific e-commerce logistics market to be worth $1 trillion by 2020.

DPD GERMANY INTRODUCES STANDARD SATURDAY PARCEL DELIVERY

Dynamic Parcel Distribution (DPD) in Germany is set to offer Saturday delivery. About 30 percent of Germans will initially have access to the service this autumn. DPD Germany has plans to expand Saturday delivery to the whole country in 2015

Boris Winkelmann, DPD Germany chief executive, reported that initial tests near company headquarters in Aschaffenburg indicated that Saturday is the most convenient time for most Germans to receive parcels. Winkelmann hopes that Saturday delivery will help his firm double its share of the German business-to-consumer market to 15 percent in the next four years.

SATURDAY DELIVERY ON ITS WAY TO AUSTRALIA

Australia Post will begin Saturday express services and parcel delivery. Saturday delivery has been available in the past during the Christmas season, but will be available year-round by late 2014.

In 2013, the company made a profit of $312 million from parcel delivery and lost $220 million delivering letters. Letter volume is decreasing 8-11 percent each year, so the post fears that losses due to letters will soon outweigh profits from parcels. This year, Australia Post projects a $1 billion loss.

Austalia Post CEO Ahmed Fahour addressed these concerns by saying, “Without change and reform to letter services, we do not have the ability to absorb this loss and could, for the first time since corporatisation, become a cost to the government and ultimately the taxpayer . . . If we wait another 12 months it might be too late as the large losses from letters will overwhelm the organisation.”

The post is also promoting an online mail management program called “Digital Mailbox” and will begin a two-speed letter delivery service for residential customers in 2015.

FINLAND’S ITELLA EXPERIMENTS WITH FOUR-DAY-PER-WEEK DELIVERY

This fall, Itella, the parent company of Finland’s national postal service Posti, will experiment with delivery four days per week rather than five. During a three-month trial,parcels, newspapers, and letters sent by individuals or small businesses at retail rates will continue to be delivered five days per week. But magazines and mail sent at business rates will no longer be delivered on Tuesdays.

The European Union directs that universal-service operators like Itella deliver five days a week. But Finnish law does not include items sent at business rates within the definition of protected universal service. Itella’s license allows it deliver items outside the universal-service area as infrequently as three days per week.

A first quarter analysis by Itella showed that in the last year, the volume of addressed letters fell by 10 percent, magazine volume fell by 10 percent, and unaddressed direct marketing dropped by 23 percent.