Update: After this article was posted, the United States reached a deal to remain in the Universal Postal Union. This is good news for U.S.-based e-commerce businesses and businesses around the world, as both rely on the United States Postal Service for competitive shipping rates and access to global markets.
E-commerce is a huge and growing business. In 2017, e-commerce was responsible for $2.3 trillion in sales. This figure is expected to reach $4.5 trillion by 2021. In the United States, e-commerce accounts for 10% of all retail sales, and that figure is also expected to grow in the coming years.
As e-commerce booms, online sellers are reaching for new markets — and they are finding them internationally. About 57% of shoppers worldwide place orders for products from overseas markets.
Of course, international e-commerce relies heavily on methods for international shipping and fulfillment, but one of the primary international shipping solutions will soon grow more complicated and expensive for merchants shipping into or out of the United States.
On Oct. 17, 2019, the US is planning to leave the Universal Postal Union (UPU), which is a 192-country organization, backed by a treaty, responsible for setting shipping rates and terminal dues for cross-border deliveries.
The possible withdrawal from the UPU would create ripple effects across e-commerce. In the short-term, American sellers who use the United States Postal Service (USPS) to ship internationally will face:
- Significantly higher shipping costs
- Greater likelihood of parcels being detained or returned by foreign customs officials
- Added complexity of finding affordable shipping solutions to specific countries
But there are other options to explore. For example, ShipEngine users can connect to GlobalPost, an international consolidator, to continue sending parcels around the world without paying significantly higher fees. We’ve outlined information on the US’s likely exit from the UPU, as well as details on how to get started with GlobalPost through ShipEngine.
Why is the US Likely Exiting the UPU?
The UPU’s history dates back to 1874 when it was established by the Treaty of Bern. Since that time, the UPU has regulated the inter-country exchange of postal parcels and mail, ensuring that a citizen in a member nation can easily mail a letter or package to a citizen in a different member nation.
The UPU has operated under a “terminal dues” system for 50 years. This means that senders in developing nations pay low shipping rates compared to senders in developed nations — such as the United States.
The UPU initially adopted its terminal dues system in 1969, for any packages or letters weighing less than 4.85 pounds. The system operates on country classifications that allow senders to pay different amounts depending on their country’s economic development stage.
When the terminal dues system first went into effect, China was considered a developing nation. Today, senders in China still pay a comparatively low rate, even though the economic strength and influence of their home country has improved a great deal since the terminal dues system first started.
This has stirred controversy in the White House, with the Trump Administration arguing that the terminal dues system places the United States at a significant disadvantage compared to China and other leading nations. Unless the UPU amends its terminal dues system, the United States will announce its departure on Sept. 30 and formally leave the Union on Oct. 17.
After departure from the UPU, the US will presumably seek out bilateral agreements with individual nations to replace the universal agreement previously in place.
What are the Implications for E-Commerce Businesses?
E-commerce businesses are constantly shipping packages both domestically and internationally, taking advantage of the aforementioned boom in online shopping and the emergence of new markets. The United States’ departure will also have profound consequences for international shippers who rely on the USPS to get products to American buyers. Those include:
- Private sector carriers such as UPS, FedEx and DHL will likely see a boom in business.
- The cost of shipping a package to the United States could increase by 300% or more.
To avoid paying skyrocketing shipping costs, e-commerce companies and other businesses will need to seek out an alternative solution—at least in the interim. Let’s explore how ShipEngine’s carrier integration with GlobalPost by Stamps.com can help.
GlobalPost: Your Affordable International Shipping Solution
GlobalPost is a worldwide delivery network that leverages commercial carriers as well as international operators. Through GlobalPost, you can continue sending packages to more than 200 countries and territories. GlobalPost also offers:
- Address verification in countries around the world
- Electronic customs forms
- Use of international flats and large envelopes
- Instant refunds
- Free pickup service in select markets
- $100 of included parcel coverage
When using GlobalPost as your international carrier, you’re able to keep your business moving forward while maximizing the number of customers you can serve with your products.
GlobalPost is Now Available Through ShipEngine
GlobalPost is the newest addition to ShipEngine’s list of carrier integrations. When GlobalPost is turned on for your account, you can use it directly through your existing ShipEngine integration.