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Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Chinese traders must pay fair postal charges or more British retailers will collapse

06-Sep-2018
David Jinks MILT (pictured)
Head of Consumer Research, Parcelhero
Chinese traders must pay fair postal charges or more British retailers will collapse
The international parcel delivery specialist ParcelHero says every year hundreds of British traders are going bust as they can’t compete with ultra-cheap Chinese imports, whose postal costs are subsidised by the UK and US postal services, thanks to secret rates arranged by the Universal Postal Union (UPU).

Under UPU rates it currently cost less to send a book from Beijing to Birmingham by post than it does to send the same tome from Bromsgrove to Birmingham. This week the UPU is holding an Extraordinary Congress in Addis Ababa to thrash out the question of cross border international delivery charges; and the courier comparison site ParcelHero says China must be forced to pay a fair rate for shipments to the UK.

ParcelHero’s Head of Customer Research, David Jinks MILT, says: ‘Countries such as the UK and America pay top dollar when each nations’ postal organisations divide revenues and costs from International Mail up to 2kg; but China pays significantly less. The exact rates are kept secret, but we know packages can be sent to the UK for less than 1/2p. This means British online retailers are put at a huge disadvantage because our delivery costs are so much higher.’

Claims David: ‘A Chinese trader selling earrings, for example, to a UK customer can send his parcel by China Post to a British address for substantially less than the cost of the stamp needed for a British seller to send the same items to the same address from within the UK.’

Adds David ‘In fact, the UPU subsidies allow Chinese retailers to mail goods in bulk on a per kilo rate. Our research revealed that in 2017 the cost of a 1kg bulk mailing by China Post to the US was around $1. UK rates are likely to be broadly similar, which means a 1kg bulk mailing to Britain would cost around 80p. So Chinese traders could send 200 5g earrings at a cost of just 80p - that’s 0.0039p per item.’

Explains David: ‘It would cost a UK Retailer £0.58 per letter or £116.00 for all 200 items to send them within the UK. Small wonder it’s estimated that this is costing the UK’s postal service tens of millions of pounds every year; and putting UK e-commerce sellers at a huge disadvantage.’

Explains David: ’It’s believed at the beginning of this year these secret rates went up by 13%. But that still is a huge difference. Why does China Post pay so little? Because, while the UK is classed as having a fully developed postal system and is in Group 1 under the UPU’s arcane ratings systems, China is described as a Group 3 ‘Transitional’ country, along with the likes of Botswana, Kazakhstan and Gabon. So China gets away with paying far less than the Target price most countries pay. But China is now the world’s second largest economy; so clearly this classification needs urgent revision.’

Says David: ‘In the US, where it’s estimated the United States Postal Service is losing $1 on every China Post shipment into the country, President Trump is saying “enough is enough”. He is threatening to impose unilateral postal rates on countries such as China if the UPU doesn’t agree new dues at this week’s Congress. While ParcelHero strongly opposes any protectionist extra costs at borders, it is certainly true that UK traders and couriers are at a significant postal price disadvantage. Small wonder China now has gobbled 42% of all global e-commerce.’

Notes David: ‘The first news out of the UPU Extraordinary Congress is that member countries have apparently “...overcome differences in regions, countries and levels of development to achieve consensus.” We hope this is true and that the meeting will conclude with an agreement China pays its full share of international mailing costs.’

Concludes David: ‘It’s not just China that is benefitting from ‘Transitional’ status. The Russian Federation is also classed as a Group Three country, which means it is far more expensive for a British seller to ship there than for a Russian trader to mail to the UK.’ To find out how traders can overcome these hurdles see ParcelHero’s full guide to shipping to Russia at here.

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