TERMINAL DUES FOCUS OF U.S. HOUSE HEARING
“Fair Competition in International Shipping” was the focus of a hearing of the Subcommittee on Government Operations in the U.S. House of Representatives on June 16. Hearing participants discussed terminal dues, the international system for assigning fees between countries for mail and small packages governed by the Universal Postal Union (UPU), a 192-member United Nations body, as well as bilateral trade agreements which preempt terminal dues.
Expressing concern over “the size of hidden shipping subsidies,” to foreign manufacturers and sellers that position U.S. businesses at a competitive disadvantage, Subcommittee Chairman Mark Meadows (R-NC) asked Members what could be done, “to eliminate anti-competitive trade distortions as quickly as possible.”
Terminal dues and bilateral trade agreements like China’s only cover items delivered by the U.S. Postal Service from other designated national operators, like China Post, not those using private delivery carriers. “The goal should be similar rates for similar services regardless of operator,” asserted Postal Regulatory Commission Acting Chairman Robert Taub.
“The terminal dues are set below the delivery costs that the Postal Service incurs,” observed Postal Service Inspector General David C. Williams. “The constant losers are the American businessman and American commerce.”
Witnesses discussed findings of a 2014 report about the terminal dues system by Anna Möller Boivie and colleagues at Copenhagen Economics, commissioned by the Postal Regulatory Commission. The paper analyzed what it determined to be market distortions in international mail and trade resulting from the present terminal dues system.
Goods shipped to online consumers in the United States from China were a central topic of concern to hearing participants. “China Post pays much less for delivery in the United States than the U.S. Postal Service pays China Post for delivery in China,” noted Amazon.com Vice President Paul Misener.
State Department official Robert Faucher described challenges resulting from the closed conditions of UPU deliberations, which prevents key documents from being made publicly available. Faucher’s agency, which holds final authority for determining U.S. positions in UPU matters, works with a Congressionally-enacted International Postal and Delivery Services Advisory Committee comprised of private and government stakeholders to establish U.S. positions relating to terminal dues and other UPU matters.
Chairman Meadows also asked witnesses to consider, “How we can make the UPU more transparent.”
GROCERIES: THE NEW MAIL?
Postal operators are expanding into grocery delivery. Austrian Post has completed an 18-month trial delivering food to households alongside wholesale grocery supplier Pfeiffer Handelsgruppe. The trial, called “Food4all@home,” included 600,000 households ordering groceries online for daily delivery by the Post. The trial employed cooled packaging, rather than more expensive cooled vehicles. According to Peter Umundum, Austrian Post’s head of parcel and logistics, “This new range of logistics services has the potential to revolutionize the food supply chain in Austria.”
Post Danmark is partnering with retailer Irma.dk to deliver food to doorsteps. Irma.dk already delivers to Copenhagen and its immediate surrounding area. The partnership will allow for deliveries across a much larger expanse of the country. The retailer will package fresh groceries into plastic boxes — or sealed thermal boxes for refrigerated and frozen items. Post Danmark will retrieve these items three times a day from warehouses and distribute them.
The U.S. Postal Service received approval from the Postal Regulatory Commission to extend its grocery delivery program for two years. USPS has been conducting a grocery delivery trial in San Francisco with Amazon.com. The agency would like to team up with additional retailers.
USPS sought approval to earn revenues up to $50 million during the test run, but the Commission limited that number to less than $10 million.
POSTAL GROUPS TRANSITION AWAY FROM CASH
Multiple posts are moving away from cash payments and introducing digital methods. The Universal Postal Union has joined the Better Than Cash Alliance, a UN-affiliated group of national postal administrations promoting digital payment as a preferred alternative to cash. According to the UPU, several hundred million people use post offices to pay government or utility bills. The global network of more than 660,000 post offices, many of which are in rural areas, places the UPU in “a unique position to promote and support its members in the shift from cash to electronic payments,” said Dr. Ruth Goodwin-Groen, managing director of the Better Than Cash Alliance.
Switzerland’s PostFinance is planning to launch its first integrated payment and shopping app, TWINT, in 2015. This service will allow consumers to pay for purchases directly with a smartphone. TWINT does not require pre-existing credit or debit cards and works independently of telecom providers.
UPGRADES TO POSTAL INFRASTRUCTURE
Postal services across the globe are investing in substantial upgrades to their infrastructure. The UK Mail Group saw its profit slump in the first half of 2014 as it prepared for a major move to a new national hub in Ryton. Chief executive Guy Buswell said, “We are now in a period of significant investment and transition, as we put the infrastructure in place for the next phase of growth. The new fully automated hub under construction represents the largest strategic development in our history . . . the investments we are making place us at a significant competitive advantage for the medium and longer term.”
SingPost, the national postal service of Singapore, has invested $36.4 million to replace all 26 of its existing sorting machines. “Upgrading our postal infrastructure with the latest technology will give SingPost capacity to process mail items faster, thereby enhancing service quality and productivity in the process,” says Dr. Wolfgang Baier, SingPost chief executive. The new sorting machines are part of an $80 million investment program that includes the creation of 24-hour parcel locker terminals.
The U.S. Postal Service has announced that it is ready to replace its fleet of 163,000 delivery vehicles. USPS would like the new vehicles to be larger and better equipped to accommodate greater package volume — as well as emit less carbon dioxide. The contract could be worth up to $6.3 billion.
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