Posted by Alex Jackson on September 30, 2017
Just over a year ago we shared with our readers some information on the universal postal union, the governing body that oversees all international postal trade and establishes the rates for these shipments(click here for the full article). In particular we focused on terminal fees and how these fees being set low for countries like China and Singapore has enabled them to essentially dump small low dollar items into the US market in the form of ePackets at a fraction of the cost a domestic seller would pay for shipping. As 2017 draws to a close we did get some good news on this front and the news is that the issue is not being ignored. While the fix is not foolproof it’s a step in the right direction. So what’s been done? Well the terminal fees those charges the destination country is paid for the last leg of the trip are going to be going up in January. How are fees going up ever a good thing you may ask? Remember we are talking about the USPS carrying millions of ePackets every day and losing money on all of them because of these low terminal fees. Since the USPS has no control over these terminal fees they have to make the money up somehow and that means increased rates. These terminal fee rates are set every four years by the universal postal union and after much arm twisting to the congress and the state department to do something about this disparity by US sellers they finally decided to get involved. After being pressured by the US government the Universal Postal Union agreed this year to raise these rates for the next four year cycle which starts in 2018.
While this will certainly slow down the rate of dumping into the US market it’s not going to stop it just make it less profitable. Expect to see a race to the bottom this fall and winter on prices on these ePacket items as overseas sellers attempt to push out as much product as possible before the January rate increase. This could also translate into less of this cheap commodity merchandise circulating into the market the reduction in margin could cause a lot of these merchants to simply quit the business. We can only hope right? How many iphone cord sellers do we really need on eBay or Amazon?
What effect will this have on the USPS and shipping costs? Will this eventually translate into lower shipping rates? Personally I doubt it but it is a possibility. This will certainly help slow down any future rate hikes and hopefully (fingers crossed here) bring the ailing USPS back out of the financial hole they are in.
Free trade is a great concept but as a seller I much prefer fair trade as in a level playing field no matter what country you are shipping from or to.