World’s Postal Leaders Scrutinize Reform Proposals

International Postal Update — July 2016

26th UNIVERSAL POSTAL CONGRESS THIS FALL IN ISTANBUL

From September 20 to October 7, postal officials from across the globe will gather in Istanbul, Turkey, to shape the future of the sector. The Universal Postal Union, the specialized United Nations agency for the postal sector, convenes a Universal Postal Congress every four years to set rules for international mail exchanges.

The UPU will use the Istanbul World Postal Strategy as its roadmap for the work cycle from 2017-2020. The UPU says that this strategy centers on three goals: improving the interoperability of network infrastructure, ensuring sustainable and modern products, and fostering effective market sector functioning.

The 2006 federal Postal Accountability and Enhancement Act mandates “unrestricted and undistorted competition” between national posts and private delivery companies and prohibits entering international agreements where competitive preference is given. It also requires making a clear distinction between governmental and operational responsibilities and assigns responsibility for foreign policy related to international postal and delivery services to the Secretary of State.

These goals are reflected in the U.S. “Strategic Plan for the UPU 2013-2016,” which includes among its First Tier Priorities: supporting the principle of cost-based, country-specific terminal fees for the delivery of international mail; promoting cooperation between postal operators and customs officials that includes electronic data exchange for international mail packages as well as commercial express shipments; and promoting reform measures to reduce or eliminate subsidies of postal products in competitive markets by UPU budget funds.

The United States delegation to the Congress is expected to include private-sector advisors to support and assist government officials.

COUNTERFEIT GOODS MAIL TRAFFIC ON RISE

Counterfeit goods are moving throughout the world more frequently, transported by international mail. According to a 2016 report by the Organization for Economic Co-operation and Development, annual trade in counterfeit and pirated goods grew to $461 billion in 2013, up from $250 billion annually.

The highest number of seizures of counterfeit goods originated in China, with Hong Kong a distant second. The OECD report noted that proceeds from trade in counterfeits often fund organized crime.

Most counterfeiters ship their goods in small packages. “For traffickers, small shipments are also a way to avoid detection and minimize the risk of sanctions. This, in turn, raises the costs of checks and detention for customs and presents additional challenges to enforcement authorities,” noted a description of the findings from the U.S. Postal Service’s Office of Inspector General.

At a roundtable meeting of the Homeland Security and Government Affairs Committee on April 19, Senators expressed concern that packages entering the country by international mail are rarely screened by U.S. Customs, because of the absence of the same advance shipping information required for packages arriving via commercial express carriers.

POSTAL OPERATORS TEST DRONES FOR PACKAGE DELIVERY

Several countries are testing the use of drones to deliver packages to customers.

Australia Post began testing drone deliveries in rural areas in April. It hopes to complete its trials by the end of 2016. The post aims to deliver small parcels to customers’ homes. It projects that the trial would serve 50 locations twice a week in “outer metropolitan” locations. ARI Labs, a local start-up, developed the proprietary drone technology and is working closely with Australia Post to test it. They expect a customer trial to take place later this year.

Like Australia, many parts of Canada are geographically isolated and may receive mail only once a week. Drone Delivery Canada, a three-year-old company, is hoping that Canadian regulators will soon develop a regulatory framework for commercial drone operation. While it waits, it’s considering lobbying for a license to make deliveries in rural areas. E-commerce provider Shop.ca and 20 other test partners have been supportive of the company’s pitch.

Deutsche Post DHL concluded a three-month test of drone Parcelcopter on May 9 with its 130th successful delivery in the German community of Reit im Winkl. It became the first postal service to successfully deliver packages to customers by drone, according to the company. DHL said that the drones delivered “urgently needed medicine or last-minute sports equipment” in as little as eight minutes.

Delivery drones have taken off in China as well. Online retailer JD.com has begun to use drones in Jiangsu province around Suqian City, according to Chinese news agency Xinhua. The drones can carry packages that weigh as much as 30 pounds; they’re transporting parcels between distribution centers, rather than to customers’ homes.

FINLAND TRYING DIFFERENT FIXES FOR ITS POSTAL SERVICE

Posti, Finland’s national post, is reforming its mail delivery service in a variety of ways. It’s no longer delivering standard letters and magazines on Tuesdays — only parcels, express letters, and newspapers. The change will affect mail recipients very little, the post says, because Tuesday has historically been among the lightest days for letter volume.

Posti has also announced that it will be combining 1st and 2nd class letters next year. According to Ulla Seppälä, who is responsible for consumer letter services, Posti wants to offer “reliable service in a cost-effective manner.” She says that combining the letter classes will make it simpler and easier to send letters.

Second class letters have “not established [themselves] in general use, despite [their] 10 cent lower price,” Posti said. The post maintains that, under the new system, letters will still be delivered within one to two days — and most the following day.

Finnish postal workers may even get into the landscaping business. Consumers can have postal workers cut their grass each Tuesday for between $75 and $149 a month. Customers must provide their own lawn mower.

INDIA POST TO LAUNCH BANK

The Indian Government has approved a proposal to establish an India Post payments bank, with 650 branches, mostly in rural areas. It should be in operation by September 2017 and will be “professionally managed,” with its own CEO. A “payments bank” can collect deposits of less than $1,500 and provide remittances and debit cards — but cannot make loans.

India Post has seen substantial profit growth in the last two years, thanks to the growth of e-commerce and the Post’s ability to deliver in remote parts of India.

Much of that e-commerce has come via Amazon. India Post just marked Amazon’s third anniversary in the country with a commemorative “My Stamp,” the brand name for personalized sheets of India Post postage stamps.

India is Amazon’s fastest-growing region. The company recently announced plans to invest an additional $3 billion in the market. In total, the online titan has committed $5 billion to India.