How Will U.S. Withdrawal from the UPU Affect You?
The United States has announced plans to withdraw from the Universal Postal Union (UPU) this October. A withdrawal ahead of the holiday season could lead to service disruptions and dramatically increased shipping costs for businesses that sell online to customers around the world through the U.S. Postal Service (USPS).
OSM is preparing for the potential U.S. withdrawal from the UPU by negotiating solutions with our partners worldwide to ensure our customers’ shipments are not disrupted.
We are also monitoring the situation closely and will adjust accordingly if new developments arise. We will inform you of any changes, and we welcome our customers to reach out to us with questions or concerns.
How will this withdrawal impact your business? Read on to learn more about the situation and the ways OSM is preparing to help our customers.
What is the UPU? Why is it meeting in late September?
The UPU is a global organization that oversees and manages critical parts of international mail delivery. It is backed by a treaty that sets shipping rates from country to country. On Sept. 24, the UPU will hold a congress attended by its full 192-country membership. This meeting revolves around the Trump administration’s announcement that it intends to withdraw the U.S. from the UPU this October. This withdrawal is pending negotiations with other members to form new bilateral and multilateral agreements.
The Trump administration’s decision to withdraw from the UPU treaty is based on its contention that the UPU treaty disadvantages U.S. shippers by empowering developing companies to ship items weighing less than 4.4 pounds into the U.S. at relatively low rates.
What happens if the U.S. withdraws from the UPU?
The USPS recently sent notices to organizations with which it has negotiated service agreements (NSAs). In these notices, the USPS warned that the international rates in these NSAs may be void after Sept. 30, 2019.
NSAs are usually negotiated annually in January after the holiday shopping season is over. Because of this, an abrupt change to current NSAs in October would leave U.S. shippers vulnerable at the beginning of the peak eCommerce season.
How does withdrawal affect you?
U.S. withdrawal from the UPU in October would cause U.S. shippers to lose their default contracts with postal agencies around the world. Shippers would be left to find the best price for international service on their own, at least until the U.S. negotiates new bilateral and multilateral deals.
As demand for alternatives to the USPS grows, shipping costs could rise to double or triple pre-withdrawal rates. Owing to this cost increase, U.S. shippers would likely need to revisit their shipping policies with customers ahead of this year’s holiday shopping season.