International Postal Update — October 2015

SECURITY RISKS FOR PACKAGES ENTERING THE U.S.

United States authorities are effectively not screening packages entering the country from foreign posts. In a recent study, Copenhagen Economics surveyed designated postal operators from 10 countries and found that none submitted security data or customs declarations on packages bound for the United States — despite the fact that all packages valued over $200 require customs information.

Ninety-eight percent of packages entering the United States by commercial express carriers must submit to “Air Cargo Advance Screening,” an electronic screening process that Customs and Border Patrol and the Transportation Services Administration use to identify high-risk shipments.

Packages mailed via foreign postal operators, on the other hand, almost never submit this required data. Without it, U.S. customs does not know what is entering the country via mail. Forty-seven agencies — including the Department of Homeland Security, the Food and Drug Administration, and the Consumer Product Safety Commission — rely on this information to enforce the law.

The absence of security data and customs declarations also renders the United States unable to collect duties and fees on packages sent by foreign posts. That costs U.S. taxpayers over $1 billion each year, according to the new report.

Some 179 million non-letter packages enter the United States every year. That number will only increase as e-commerce continues to expand. The lack of data on postal packages crossing American borders by mail has the potential to threaten national security and public safety. Packages sent by international mail are far less likely to be inspected by Customs and Border Patrol upon entry to the United States.

SMALL PACKAGES REPLACING LETTERS IN THE MAIL

Thanks to e-commerce, small packages’ share of the global mailstream is booming.

According to research by Transport Intelligence published in a 2015 report from Citigroup, the global express and small package market grew 6.8 percent between 2012 and 2013. The Asia Pacific region, South America, and Middle East were responsible for much of that growth.

The global express and small package market is forecast to grow at a composite annual rate of 9.8 percent through 2017. Researchers point to the Asia Pacific region, Africa, and North America as the three areas that will see the quickest expansion of their express and small package markets.

The volume of letters, on the other hand, has been shrinking for some time. Data from the Universal Postal Union shows that between 2009 and 2013, letter-mail volume in industrialized nations fell almost 13 percent.

ILLEGAL DRUGS BY MAIL

Increasingly, dangerous drugs are crossing into the United States through international mail.

China has been a chief source for manmade synthetic drugs with chemical structures that constantly change to circumvent international laws, according to law enforcement officials. “Hands down, China is No. 1,” as the primary source for new synthetic drugs, one federal official told The New York Times earlier this year.

In the United States, poison-control incidents caused by Spice — a narcotic chemical whose psychoactive effects include altered perception, elevated mood, and hallucination — increased fourfold through the first four months of this year compared to 2014 Eighteen deaths in Florida were recently linked to a stimulant known as alpha-PVP or flakka, which is banned in the United States but legal in China.

In Australia, China is the leading source of illegal amphetamine substances, according to a report from the country’s Crime Commission. The European Union has also seen a rise in illegal drugs from China. In Mexico, drug traffickers use methamphetamine chemicals sourced primarily from China.

Illegal online pharmacies are also sending drugs through the mail. According to recent research from LegitScript, a company that verifies and monitors online pharmacies, illegal pharmacies are utilizing national posts as their primary means of delivering drugs to consumers. These readily available, mail-order drugs have had serious consequences for public health and safety in countries around the world.

LegitScript analyzed 29 illegal pharmacies and found that all used government-sponsored shipping services exclusively. None of the shipments made during the course of the study were intercepted by U.S. customs.

POSTS WORLDWIDE BETTING ON E-COMMERCE

Postal services around the world are investing substantial money into e-commerce ventures. The United Kingdom’s Royal Mail recently invested in Australian e-commerce start-up Market Engine Global. The company makes software that offers online retailers real-time analytics, currency conversion, and secure payment and logistics networks. Market Engine’s platform is used by some of the biggest e-commerce sites in the world, including Alibaba and JD.com.

Royal Mail hopes to use Market Engine Global’s presence in the Chinese market in order to increase its international package delivery business. The investment in Market Engine comes on the heels of the British post’s backing of personal shopping app Mallzee and its purchase of Storefeeder, a company that helps connect web merchants with major selling platforms like Amazon and eBay.

India Post is also partnering with a number of e-commerce companies. FlipKart, an online retailer in India that sells electronics, books and clothing, has joined with India Post to expand its reach for distribution and cash-on-delivery services into rural areas. mVikarsha Mobile Solutions provides an assisted e-commerce platform that consumers will be able to use at rural post offices.

India Post’s e-commerce center in Mumbai currently has the capacity to process 30,000 parcels per day.

Finland’s mail service, Posti, recently launched a pilot program to test drones in the delivery of online purchases. The robotic helicopters will fly between Helsinki and an island just offshore. The experiment with drones is part of an effort to make online shopping “quicker and better for both sender and recipient,” said Jukka Rosenberg, an executive responsible for parcel and logistics services at Posti.