Hussein welcomed the agreement Wednesday in an interview with reporters as a preservation of unity, but acknowledged that it would mean higher postal rates for some. On Wednesday, Navarro said the agreement would “transform an outdated and discriminatory system into a modern and resilient system, much better prepared to meet the new demands of e-commerce.” The first phase of the amendments to the new UPU contract began on July 1, 2020. As a result, U.S.-based e-commerce companies, which ship via USPS to other countries, have experienced an increase in international shipping costs. This is due to the fact that many UPU member countries have increased their costs of receiving and delivering parcels from the United States. In addition, consumers who order products from small e-commerce vendors in China should expect higher shipping costs. The UPU meets every two years to renegotiate its contract. They are trying to make sure that it is economically possible for someone from a developing country to send international mail. To do this, the UPU countries according to the status of economic development. It requires lower final tariffs for economically disadvantaged countries.
The South China Morning Post reported that China`s small e-commerce companies would suffer from higher postal costs. However, major Chinese retailers are unlikely to be affected by the contract change. Large companies often have sophisticated logistics companies with multiple warehouses around the world. Most of them do not ship small individual packages to U.S. customers from China. Postal changes will therefore not bring their business models back to the front. Almost all parties involved in the U.S. shipping system supported the government`s efforts to restructure the prices of some international mailings, including the Postal Service, its regulator, business groups and mailers across the industry.
In the past, the cost of shipping a 4.4-pound package from China to the U.S. was $5.41, less than it would cost a U.S. e-commerce vendor to send the same item to a U.S. address. (Note: International postal rates from China to the United States are rising sharply above 4.4 pounds.) Non-postal cross-border companies compete with postal solutions in the open market. At some origins (China), the post office rate was so low that it eliminated the possibility of competition in the market. With the increase in the cost of mail distribution, these companies will have a more commercial opportunity to offer their services, which will now be closer to cost parity and a possible revaluation by their postal competitors.