
USPS loses millions each year on local delivery of mail from abroad (2014) - acjohnson55
https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is-losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/
======
csydas
> All of this is little comfort to McGrath, who chafes at the thought of the
> Postal Service helping Chinese merchants poach his customers. “All of us
> sellers are selling a lot of Chinese goods in America but at least we’re
> creating jobs, making money, and adding to the economy,” he said. “But when
> people buy direct from China that’s adding nothing to the American economy.”

I understand the seller's frustration - their means of supporting themselves
has been taken away, but I'm not sure I buy the argument that we need the
intermediary just to "add to the economy". To me it just seems like an
unsustainable business model that was destined to die once global
communication became much easier, not just because of the various treaties and
agreements of postal services.

The moment that chinese sellers could get a site available to a global
audience, the need for an intermediary vanished; before you essentially paid
for the connection; an extra $18 on a remote controlled toy boat was paying
for access to the seller's inventory, supplied by his Chinese connections.

Now, there's no need for that connection or that warehouse - the visibility
for any foreign seller is much greater, even to the point that it probably
would still be valuable even without the USPS trade deal.

It's unfortunate, but this just seems like a model that was destined to die.

~~~
013a
But the core of the argument is that this isn't pure capitalist economics; the
government is essentially subsidizing China's ability to compete in America.
It'd be one thing if China could make it and ship it for legitimately cheaper,
but abusing a treaty loophole in USPS regulations isn't the same. That's an
unfair advantage.

There's also a second argument at play: If China can make a product for $10
cheaper, legitimate shipping included, because they're allowed to abuse their
workers and pay them much less, do we trust pure capitalism to properly
prioritize the values of the American people? This really is the case of, say,
Apple's electronics plants in China.

~~~
BearGoesChirp
As to your second argument, I'm still not sure why it is legal to buy or own
materials in the US created by human rights abuse. Let's take a case of a
Chinese good produced by political slaves in prison. By buying or owning that
good, a person is financially supporting the abuse that went into creating
that good. Same applies for something that is produced for cheaper due to an
ability to pollute in ways that aren't legal in the US (or other countries,
this argument need not be just for the US).

But there are some digital goods where we do not give this same treatment
(namely digital material involving really bad child maltreatment). Regardless
of the legality of where the material is produced, owning it in the US is
illegal because it couldn't legally be produced in the US and funding such
illegal action elsewhere is considered morally wrong enough to ban.

Simply put, I think the core idea should be applied to all financial
transactions. If one is buying a good or service that would be illegal in the
US due to harm to another human, it should be illegal to buy or own in the US,
even if where it is produced is legal. The law should prevent a person from
harming another human by shopping around and finding wherever has the least
legal protections.

~~~
exelius
The problem is that the US has no moral high ground here. We too have
prisoners manufacturing goods below minimum wage, and while you won't be
jailed in the US because of your political affiliation, you definitely can be
jailed because of your religion, ethnicity, etc.

If we applied this to foreign transactions, foreign countries could easily use
the same grounds to block goods and services coming from the US.

------
phlo
These costs were related to the terminal dues that USPS (and other postal
services around the world) charge each other in exchange for distributing
parcels in their respective countries. [1] The system dates back to the 1960s
and was implemented to ensure people could exchange letters internationally --
and the massive increase in small international parcels from e-commerce
transactions is now overwhelming it.

Things will change starting next year. The Universal Postal Union (UPU) has
adopted a new revision of the terminal dues system [2] that classes bulky
letters and small parcels differently from normal mail.

[1] [https://en.wikipedia.org/wiki/UPU](https://en.wikipedia.org/wiki/UPU)

[2] [http://news.upu.int/no_cache/nd/member-countries-adopt-
new-t...](http://news.upu.int/no_cache/nd/member-countries-adopt-new-terminal-
dues-system/)

~~~
mistermann
> Countries are currently classified by their level of development, meaning
> those in the most developed groups pay contributions into the Quality of
> Service Fund on top of terminal dues to those in the less developed group.
> This mark up goes toward development projects in the recipient country.

Does this mean "less developed" China will end up being subsidized even more?

~~~
phlo
The change to the regime for bulky letters and parcels is not the same as the
group mergers. I was referring mostly to the former, which will increase the
dues for bulky letters and small parcels to a higher per-kg-rate than the
current rate that applies to all mail.

The latter change merges some groups but will, to my understanding, not affect
China. Groups 1.2 and 2 (countries which joined the terminal dues target
system in 2010 and 2012, respectively) will get merged; as will the countries
in groups 4 and 5, which are currently transition into the target system.
China appears to remain in group 3. [1]

[1]
[http://www.upu.int/uploads/tx_sbdownloader/listCountryClassi...](http://www.upu.int/uploads/tx_sbdownloader/listCountryClassificationEn.pdf)

~~~
mistermann
To keep it simple: will China finally have to pay more (because they are also
shipping across the sea) to ship a package to middle America than an American
at <wherever the port is where the Chinese goods are unloaded>? Or will it
just be _less_ of a subsidy.

~~~
phlo
No.

China will have to pay more than today because a lot of their parcels will
fall into the (now more expensive) bulky letter category. The US remains
highly-developed, so you can expect terminal dues to remain cheaper than the
retail rate. Finally, I suppose the Chinese government will continue to
subsidize the transport from China to the unloading port in the US.

In essence: When sending from China, you can expect to just about pay the
terminal dues; the international transport is subsidized. You can expect this
to stay true for as long as the US is significantly more developed than China.

------
ykler
It seems like it would have been good for them to mention that the white paper
they cite giving the estimate of $79 million dollars lost on delivery of
inbound international mail at artificially low treaty prices in 2013 also
estimates savings of $136 million on delivery of outbound mail at artificially
low treaty prices in 2013 for a net profit of $57 million. Also, it estimates
that the inbound rates will increase 13% per year between 2014 and 2017, while
the rates the US pays foreign countries will only increase 3% a year over this
period.

------
phkahler
The US postal service has had an inaccurate price model forever. Bulk mail
(junk mail) has always been way cheaper to send than first class. It's for the
same reason - they act like delivery is almost no-cost. They assume the system
is already in place, that someone will swing by your home daily to drop stuff
off and pick stuff up. Then adding an item to the pile is really of little
consequence. The reality though (for a time at least) became that the mail was
largely junk being subsidized by the high price of a few first class pieces of
mail.

They've needed to fix the pricing model for a very long time.

~~~
mcbauer
Actually I think the article is just PR. While the post offices in north
America and Europe deliver Chinese goods at no cost, at the same time Chinese
people send millions of very expensive packages to China.

For example Chinese parents who are well off want to have genuine baby food
from western countries since the milk powder scandal that hit China a few
years ago. They pay tremendous surcharges for a package of baby food and it
must be sent from the west.

The same goes for luxury goods. You want to be sure to get a genuine Louis
Vuitton bag? Get someone you know to buy it in France and have it shipped to
you. The French postal office will cash in 50€ while the costs are certainly
far below that.

------
Brotkrumen
Like every good entrepreneur McGrath wants globalization for (only his)
company and isolationism for the consumer.

Economically, getting goods for as fraction of the former price to consumers
for just 78million a year sounds like a fantastic deal.

------
andrewf
Australia Post has long had the same problem with shipments from the US.

They've recently opened a warehouse in Oregon, where they'll receive domestic
US shipments, and deliver to you in Australia for a separate fee.
[https://shopmate.auspost.com.au](https://shopmate.auspost.com.au)

~~~
prawn
And shipments from Asia. I recently found something for sale in Australia: $15
plus $10 shipping within Australia. I bought the exact same product direct
from China/HK and it was under $4 _including international shipping_.

I imagine the labour cost is one contributor within Australia. Without volume,
no one wants to be doing runs to the post office for a dollar.

With products from the US, I've routinely bought things from Amazon and
shipped US-AU and saved money easily - hard drives, memory cards, and even
things for which the shipping should make it cost prohibitive like a full-size
baby pram.

~~~
distances
It's the same in Europe. Local online merchants have no way to compete since
just the national delivery costs multiple times the net price of a foreign
import product.

It's good for consumers, but also means the domestic e-commerce is severely
underdeveloped.

~~~
kuschku
Actually, delivery costs in Europe are basically nil.

You can ship a package in 3 days all across the EU for under 4€ with DHL. I
know, because I’ve done so several times.

Stuff that’s small enough to fit in a letter even for 80ct across the entire
EU in 2 days.

In fact, the domestic shipping market in the EU is actually cheaper than
getting international parcels.

~~~
distances
I got curious, and indeed looks like a package in Germany is domestically 4€
and within EU 8.89€. However, when sending a small package from Finland it's
22€ domestic and 40€ to Germany with DHL.

So a disclaimer to my original claim: applies only to a subset of European
countries.

~~~
Tepix
Companies that ship a lot of stuff get _much_ lower prices from DHL, UPS etc.

~~~
ahakki
Yes, I habe worked at a company where we would ship a high amount of
construction machine spare parts with FedEx, DHL et al. We had a ~90% discount
on their regular prices.

------
Const-me
> In most cases, however, postal services still charge each other less than
> they would charge their own citizens for moving a package across the
> country.

Very likely, it costs them less. Own citizens don’t drop their packages at
cargo hubs, already sorted and payed for by wire transfer. Pickup, sorting and
processing payments have costs.

~~~
kuschku
Actually, with DHL in Germany, that’s exactly what many people do. The
cheapest version is paying by wire and getting the code to put on the package
via their website, and dropping the parcel at a package hub, the second
cheapest version s paying by wire and getting the code to put on the package
via their website, then dropping off at a DHL store, the third cheapest
version is getting it stamped and dropping it off at a DHL store, and the most
expensive option (about 20$ more per parcel!) is getting it picked up by the
delivery guy.

Which is why DHL can offer prices such as 4€ for a cross-Europe 1kg 30x30x60
package.

------
dis-sys
Now this is boring. People keep complaining about the fact that China's cheap
stuff is flooding the US market. How about exporting some expensive US made
stuff to China to close the gap of trading?

Oh, you can't. Chinese living in China are not even allowed to buy Intel Xeon
Phi cards, export license is required to safeguard your nation.

Maybe make the US short term visa more accessible to Chinese tourists so they
can spend more cash in the US?

Oh, you can't. tens of millions Chinese with science/engineering degrees will
have to go through the mantis check managed by FBI to make sure they won't
steal your nuke techs when visiting the casinos in Vegas. It can take up to
several years to get a US tourist visa.

[https://en.wikipedia.org/wiki/Security_Advisory_Opinion](https://en.wikipedia.org/wiki/Security_Advisory_Opinion)

~~~
kuschku
And that’s why millions of chinese tourists every year are all across europe,
buying everything they can get.

Especially affected by this are cities known for quality products, for example
Solingen, the city where most of modern high quality knives and scissors are
from, is overran by chinese tourists.

And the other thing you mentioned also works here – we simply export lots of
automation robots to China, e.g. Foxconn just made a deal with a German
automation company to replace over 400'000 workers with robots.

Just to prove that your argument is not just valid, but actually proven in
reality.

~~~
ccozan
Are you talking about KUKA ? Because they just got bought by chinese [0].

[0] [http://www.reuters.com/article/us-kuka-m-a-mideamidea-
group-...](http://www.reuters.com/article/us-kuka-m-a-mideamidea-group-
idUSKBN14J0SP)

------
devy
This is another example of WaPo's overly sensational piece. To be fair, USPS
loses BILLIONS on retirement funding, reduced mailing due to the dominance of
Internet age with emails and other competitions. [1] $79 million in fiscal
year 2013 loss due to this type of shipments is a drop in the bucket comparing
to the mishaps in operations and reduced volumes at $3B/quarter in 2011.

[1]:
[https://en.wikipedia.org/wiki/United_States_Postal_Service#R...](https://en.wikipedia.org/wiki/United_States_Postal_Service#Revenue_decline_and_planned_cuts)

~~~
gervase
To be fair, the USPS is only "losing billions" on retirement funding due to
the pre-funding obligations imposed by Section 8909a of the Postal
Accountability and Enhancement Act of 2006, _not_ obligations owed to current
employees or retirees. [0]

There was some speculation at the time that this was a regulatory attempt to
"tie their hands" on investments to address the online shopping market, which
has more than offset the decline in carriage due to email. For example, during
the 10 year period covered by the pre-funding obligation, UPS managed to
increase revenues on domestic shipping by ~45%. [1]

Excluding these mandatory payments, the USPS is actually slightly profitable,
to the tune of (conservatively) $92M as of 2015 [2]. In this context, a $79M
loss is a major portion of their annual profits, although still a drop in the
bucket compared to their gross revenue.

[0]:
[https://www.govtrack.us/congress/bills/109/hr6407/text](https://www.govtrack.us/congress/bills/109/hr6407/text)

[1]: [http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-
re...](http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-
reportsannual)

[2]: [https://about.usps.com/who-we-are/financials/annual-
reports/...](https://about.usps.com/who-we-are/financials/annual-
reports/fy2015.pdf)

------
Freak_NL
This is a global phenomenon by the way. European postal services have the same
'problem'. The way international postal agreements work mean that China's
postal system is effectively being subsidised by the postal services in (at
least) the US and the EU¹.

Interestingly, this volume of shipping offers chances as well for (former)
national postal services. In the Netherlands the privatised former national
postal service is partnering with AliBaba to deliver goods in as little as two
weeks from China to your (Dutch) doorstep (currently three to four weeks is
common).

1: [http://fortune.com/2015/03/11/united-nations-subsidy-
chinese...](http://fortune.com/2015/03/11/united-nations-subsidy-chinese-
shipping/)

------
basicplus2
In Australia it seems that USPS is charging us millions on imports from The US
to discourage us buying anything from the US

Small items can be a fraction of the cost of the freight from the US.

------
salimmadjd
I've ordered very small camera accessory stuff on Ebay that arrived from
China. I could never understand how they would be able to manufacture,
package, ship this across half the world for less what I pay on postage to
send my tax returns to IRS.

------
WhiteOwlLion
Your competitive advantage is that you can deliver the same product within a
more predictable window. Getting something from China by surface can take 7
days to 8 weeks. If you use USPS service domestically, you get quasi-tracking
with a shorter delivery window of 1 to 3 days (usually).

------
Hasz
When you buy from a US seller, you're buying time.

A typical ePacket is about 7 to 14 days from shipment, while first class mail
is generally about 3 days from shipment. China Post is worse, anywhere from 30
to 60 days is common. Yanwen economic mail is similar, as are the litany of
other carriers used to exploit shipping restrictions on batteries and other
items.

Is it a great model? Maybe not, especially for more expensive items. But for
low cost, low value items shipped only via china post, there will always be a
US based box-shifter willing to collect that 20% premium on time.

------
kita99
So the Postal Service are willing to operate at a loss just to ride the
e-commerce boom and grow its Asia presence?

Why? Am I missing something here?

~~~
jakob223
They have to offer reduced price mail through this treaty, and they'd rather
do the ePacket thing which is less of a loss.

------
Shivetya
I see this with many auctions which are direct from China. Incredibly low
auction prices and similar shipping. Do a search for antique Chinese porcelain
and sort by lowest ship/price. You will find many items starting at one cent.

I have won a few at a dollar or lower and always received the item. so I have
to assume there is no real ship cost to the sender. even the packaging if done
here would cost more than what I have paid; usually custom styrofoam that
perfectly encloses the item but just remove tape and it opens.

Considering their dollar a package deal with Amazon for last mile I figure
they have many ways to lose money

------
treebeard901
> “But when people buy direct from China that’s adding nothing to the American
> economy.”

Wait a minute... This argument doesn't make any sense. The post office is
delivering to a US citizen that supports said postal services through paying
taxes. If they choose to purchase from China, Amazon, or eBay that is their
choice.

Maybe people who are not citizens and have not paid any taxes benefit from
this but I suspect those are extreme edge cases.

~~~
dustinblake
The postal service is _not_ taxpayer funded!

Yes, they are indicated in the Constitution, and they must service each and
every little town, and they must go to Congress to gain approval for rate
increases, but they are _not_ supported by any tax revenue.

[https://about.usps.com/who-we-are/postal-
facts/top-10-things...](https://about.usps.com/who-we-are/postal-
facts/top-10-things-to-know.htm)

~~~
oicu812
This is not true, but a common debunked claim from the postal union. The
postal service gets $18 billion per year in tax benefits including exemption
from property taxes and vehicle registrations as well as below-market
borrowing costs.

[http://fortune.com/2015/03/27/us-postal-
service/](http://fortune.com/2015/03/27/us-postal-service/)

[http://www.politifact.com/georgia/statements/2013/jul/24/ame...](http://www.politifact.com/georgia/statements/2013/jul/24/american-
postal-workers-union/postal-service-claim-not-fully-target/)

------
icetoad
I simply don't buy from Chinese sellers on ebay. I sort by location distance
and then work my way through that list or lowest price and skip china entries.
I am not waiting 3-6 weeks for something just to save $2. Lets be honest,
something that cheap, isn't even worth shipping back if its broken ( and most
of the time they will just ship another ).

------
jlebrech
I often thought the postal service SHOULD be a public service but it's
publicly funded at a loss then no.

~~~
Brotkrumen
Think of it this way: every one of the 350 million americans chip in 0.22$ a
year to get their iPhone cable for 1.80$ instead of 40$.

Still sound bad?

~~~
danellis
Why do some people write the dollar sign after the number? Similarly, why do
some people write the percent sign before the number? I initially thought it
might be a locale thing (like swapping commas and decimal points), but I've
seen a lot of Americans doing it too.

~~~
gutnor
> Why do some people write the dollar sign after the number?

For foreigners, that's easy, that's how you write currencies in other
languages.

For American doing it, I guess it is just a typing artefact. You think "ten
dollars", you write "10$", there is no autocorrect for that kind of things so
you let is slide.

~~~
takingflac
Could also be a holdover from using cents. I have always seen the cents symbol
used after the number so 70¢ is a shorter way to write $0.70

------
gumby
Nice case of peering agreements in the real world!

(Of course these peering agreements come from a postal union treaty rather
that individual 1:1 agreements among private parties, but really they are the
same thing).

The number of routes is small enough that there's no need for postal BGP :-)

------
hellbanner
Wow, if they charged foregin deliveries as much as domestic deliveries, then
maybe they could stop spam in mailboxes.

Does anyone know how to stop junkmail? Postal workers have told me they can't
not deliver it - even if you pay for a PO Box.

~~~
Sebguer
[https://dmachoice.thedma.org/register.php](https://dmachoice.thedma.org/register.php)

Is recommended by the FTC.

~~~
hellbanner
News to me, thanks.

------
pg_bot
We should follow the lead of Sweden, Germany, Japan, and Great Britain and
begin to privatize the US postal service. There is no need for the Federal
Government to control pricing, delivery, or market entry for postal services.

------
allan_golds
Bad link.

------
vacri
> _The USPS inspector general’s office estimated that the USPS lost $79
> million in fiscal year 2013 delivering this foreign treaty mail._

$79M is governmental chickenfeed, given how much this service improves the
quality of life of its citizens. For perspective, it's moderately less than
the cost of one (1) F35.

~~~
snuxoll
You're right that $79M is basically nothing when it comes to government
spending as a whole, but the USPS doesn't get support from federal taxes -
they have to generate enough revenue to pay their own expenses.

The government has already been trying to do everything they can to run the
USPS into the ground, _something_ needs to be done about these treaty
deliveries or a continual increase in volume is going to harm the postal
service (I don't know what that something looks like, maybe make the federal
government pay the cost difference for these treaty deliveries since the
postal service is required to deliver them).

