International Postal Update — October 2016

UNIVERSAL POSTAL UNION CONGRESS TWEAKS TERMINAL DUES SYSTEM

The Universal Postal Union, the governing organization for international mail, concluded its Istanbul Congress with modest revisions to its pricing system for shipments between designated postal operators. Member countries approved pricing changes to this system, known as Terminal Dues, which will increase heavily discounted rates for shipping small packages from China and other designated developing countries to the United States and other industrialized nations.

The new, above-inflation price increases, and other price changes, will be in place from 2018-2022.

The UPU also rejected a proposal by the United States that would have ended the different customs clearance practices currently in place for international shipments by designated postal services than for those from commercial shippers. A Senate Homeland Security and Government Affairs Committee roundtable in April observed that small packages sent through foreign postal operators are far less likely to go through customs screening and, if necessary, physical inspection, than similar packages sent via commercial shippers.

Under the federal Postal Accountability and Enhancement Act of 2006, it is United States policy “to promote and encourage unrestricted and undistorted competition in the provision of international postal services.” The U.S. Postal Regulatory Commission in 2015 determined UPU Terminal Dues rates to be discriminatory because they are less than domestic postal rates for comparable service. In a filing earlier this year, an analysis of the proposed UPU changes by shipper Federal Express observed that “it appears likely that [the new rates] will provide no improvement in the current unsatisfactory cost coverages.”

FORTHCOMING CHANGES TO U.S. POSTAL REGULATIONS?

The Postal Regulatory Commission announced that it will begin to review existing postal rates this December, as mandated by the Postal Accountability and Enhancement Act of 2006. The PAEA, which established the current ratemaking system, requires the PRC to review the system of regulation for postal rates every 5 years.

In preparation for its review, the Commission sought input earlier this year from stakeholders on a wide range of essential factors to the Postal Service’s finances and operations, including pricing systems for market-dominant and competitive products, service quality measures, and whether the Postal Service should be permitted to offer nonpostal services in the future.

The regulator asserted forcefully in its Annual Compliance Determination for 2015 that it held the Postal Service out of compliance for sharp declines in service quality for some of its most lucrative monopoly products, including First-Class single piece letters.  Its last 5-year review asserted that pricing should be linked to improvements in service quality.

Meanwhile, in Congress, three Republican senators introduced a bill that would require foreign postal services to provide electronic advance data for non-letter class mail sent to the United States, in hopes that it would help fight synthetic-drug trafficking.

The Synthetics Trafficking and Overdose Prevention (STOP) Act requires foreign postal services to provide electronic customs data — such as the identity of the sender and the recipient, the contents of the package, and the package’s destination — before packages enter the United States. Private carriers like UPS and FedEx must already comply with similar regulations.

The STOP Act would also allow U.S. Customs and Border Protection to collect a customs fee of one U.S. dollar for all non-letter class mail entering the United States via foreign post. Private carriers already pay this fee.

E-COMMERCE PARTNERSHIPS REACH ACROSS BORDERS

The Canadian government and Chinese e-commerce group Alibaba recently launched the “Canadian Pavilion,” a platform on Alibaba’s shopping website designed to connect Canadian businesses with Chinese consumers. Upon its launch, Canadian Pavilion featured more than 30 Canadian firms selling over 100 products.

The European Commission unveiled Deliver in Europe, an online database that will connect online retailers with logistics services across Europe. The initiative, funded by the Commission, will allow retailers to find information and compare costs for thousands of European operations services. The website is intended to increase transparency for cross-border services and boost international e-commerce sales in Europe.

eBay launched a new platform called Crece Con eBay to promote the international growth of entrepreneurs and small and medium enterprises (SMEs) in Mexico. The Crece Con eBay platform will provide extensive services to businesses, including user guides, tutorials, and real-time support. There’s room for eBay in this market — only one of every 10 Mexican SMEs currently has its own e-commerce website.

International mail service firm Asendia, a joint venture of Swiss Post and France’s La Poste, announced a sales partnership with Israel Post to facilitate online retailers’ access to the Israeli market. Ninety-one percent of Israeli Internet users shop online. Among online shoppers worldwide, Israeli consumers spent the third-most on online shopping in 2015. The partnership will also allow goods to be fully tracked upon their delivery to Israeli consumers.

DRONES TESTING LAST-MILE DELIVERIES

China-based companies JD.com and Cainiao, the smart logistics operator for Alibaba Group, unveiled autonomous land-based delivery robots last month. JD.com’s land drone, a six-wheeled, one-meter long robot, has six compartments for carrying packages of different sizes. Cainiao’s land drone, named Xiao G (“Little G”), is a one-meter tall robot with a carrying capacity of 10-20 packages.

Presently, only JD.com has announced plans to launch robots in the near future. Cainiao’s robot is still undergoing testing at Alibaba. JD.com estimates that its delivery robot, which is currently undergoing road tests, will be available for large-scale use next year.

In September, Mercedes-Benz revealed dual investments in last-mile drone technology that will feature Mercedes-Benz Sprinter vans acting as “motherships” in the delivery process. The initiative aims to cut costs and delivery times by using flying and land-based drones as the final leg of a delivery system.

The “Vision Van” features flying drones provided by California start-up Matternet affixed to the roof. A robotic arm inside each van hands packages to the drone through a self-opening hatch on the roof. The drones can carry items as heavy as 4.4 pounds and deliver packages to recipients as far as six miles away.

The “Robovan” concept hosts as many as eight land-based robots, provided by Starship Technologies, inside the van to complete last-mile deliveries. The drones have a 22-pound capacity and can travel up to 10 miles to deliver packages to customers’ doorsteps. Mercedes-Benz expects that this system will make last-mile delivery 50 percent more efficient.

Starship Technologies is also partnering with Swiss Post to test last-mile deliveries using land-based robots. In partnership with businesses in the food and healthcare industries, Swiss Post is using land drones to deliver products in three locations across Switzerland. The drones can carry as much as 40 pounds over a three-mile radius and move at a walking pace. Swiss Post expects that long-term use of the land robots could provide an extension to existing delivery services, which do not currently support same-day, same-hour, and grocery deliveries.