Why the Universal Postal Union is hurting small businesses

The amount you pay for international shipping rates via your national postal service is regulated by an entity called the Universal Postal Union (UPU), which will meet in 2016 to set its new long-term strategy.  According to Fortune Magazine, national governments aren't paying attention.  But small makers need parity in shipping rates to compete in the global marketplace.  Due to UPU subsidies, it can cost $30 more to ship a 1 lb package from the U.S. overseas than it costs a business overseas to ship the same package to the U.S., and other developed countries face a similar imbalance. That's a big deal when you're shipping small packages to international customers. We did a little research on international shipping costs to learn more.

China has been the biggest beneficiary of UPU subsidies, and its impact on U.S. internet sellers was the focus of this Washington Post article.

Malaysia's national post appears to benefit from UPU subsidies to the tune of about $29, but commercial shipper Fedex's rates have parity, more or less, in both directions.

Japanese shippers appear to benefit from UPU to the tune of $31. But, oddly, commercial carrier Fedex seems to charge Japanese shippers more than U.S. shippers to send the same package to the U.S. and Japan, respectively.

Australian and U.S. shippers enjoy parity, more or less, with Aussies holding a slight advantage.

Singapore shippers using national post enjoy a $20 subsidy; however, Fedex rates are more or less on par.


Shipping rate parity is far from a reality.  UPU reform is needed to level the playing field for small businesses globally. While it's wonderful for developed countries to help developing countries grow their economies through exports, the reality of UPU doesn't make sense. Developing countries like China that receive UPU subsidies are net exporters and economic powerhouses. In the meantime, small businesses in developed countries like the U.S. are unable to compete in the global marketplace because of high shipping costs, and they even pay the price in higher domestic shipping costs, which may be raised to subsidize the growing volume of small shipments coming from overseas.  Developing countries should be competing fairly based on a value proposition that includes unique products and lower labor costs, not on subsidized shipping.