Will logistics costs increase in October?! The United States will take new actions soon

When we just started the trade friction with the United States last year, the United States did more than just use tariffs to hinder our foreign trade industry.

On October 17 last year , the United States initiated the process of withdrawing from the Universal Postal Union (UPU) , attempting to threaten the UPU to revoke China's postal subsidies for developing countries.

According to the information released at that time, if UPU cannot provide the conditions that the United States wants within one year after the launch of the procedure, that is, by October 17 this year, the United States will directly withdraw from UPU.

At present, there is still no sign that the two sides have reached an agreement. Judging from Trump's personality, there is a high probability that the United States will directly withdraw from the UPU in October.

What impact will this have on our cross-border sellers? Is the US UPU requirement really that important? Today I will analyze the upcoming changes in October.

What does the United States want with the UPU?

The Universal Postal Union (UPU) was established with the main responsibilities of promoting, organizing and improving international postal services and providing possible postal technical assistance to member countries.

Due to the particularity of the postal industry, supporting developing countries in building a complete postal system can also effectively reduce costs for other developed countries.

Therefore, for developing countries that participate in the UPU, the UPU will provide these countries with a more favorable fee than developed countries.

For example, it costs $20 to send something from one state in the United States to another, while the same item costs about $5 to send from China (a developing country) to any state in the United States . Such low postal fees are due to the UPU's preferential policies for developing countries.

But the UPU itself will not make up the difference; the real payer is the United States Postal Service.

When the United States initiated the process of withdrawing from the UPU last year, some U.S. officials stated that subsidizing postal parcels from China would consume about $300 million of the U.S. government's fiscal budget each year.

Thanks to low postal charges, a large number of low-priced, high-quality Chinese products quickly occupied the US market, and American manufacturing companies that had to bear more costs were no match for them.

At the beginning of his term, Trump declared that he would revitalize domestic manufacturing. In addition, most of the votes now come from industrial states. In order to be re-elected, Trump will definitely do his utmost to make American products competitive again.

▲Trump's speech in Ohio, a famous industrial state

Threatening UPU or directly withdrawing can reduce the gap in postal logistics costs between American and Chinese companies, which can increase the selling price of Chinese products to a certain extent and enhance the competitiveness of American products.

How will it affect cross-border sellers next?

Because there are not many benefits to staying in UPU, there are only two possible outcomes and neither is good.

Either the UPU accepts the US's request and cancels its postal subsidies to China, or the US withdraws from the UPU, in which case the US Postal Service will have the right to set its own postal rates, which will certainly increase the cost of shipping from China to the US.

The two results are actually similar. In the long run, postal costs will increase.

However, even if the United States announces its withdrawal from the UPU, postal charges will not increase immediately. Instead, the U.S. Postal Service will control the rate changes itself. Therefore, whether or not to increase rates and how much to increase will ultimately depend on the bilateral communication between the U.S. Postal Service and other countries.

Do you feel anything after reading this? Yes, if the U.S. Postal Service controls the rate, it will be like the U.S. having one more bargaining chip in the trade negotiations with us.

This is not good news for us to reach a fair and dignified trade agreement. However, we have not revealed all our cards, so cross-border sellers do not need to worry too much. In comparison, the impact of the increase in postal fees on sellers needs more consideration.

If the postal fee increases, the sellers of small packages with low value will be directly affected. These sellers have low unit prices and low weights, and they can make some profits by using the ultra-low postal fees, such as for small accessories. If the postal fee is no longer low, these sellers will have to reconsider their Amazon operation route.

Although there is no direct impact on FBA sellers, the increase in postage by the postal service may still affect the cost of FBA delivery to a certain extent. When the U.S. Postal Service started the process of leaving the UPU last year, it considered raising fees for Amazon.

It is possible to implement this increase while completing the exit procedure this year. Therefore, it is recommended that you plan your profit margins in advance to cope with the wave of cost increases that may start in October. Finally, I have compiled a high-profit margin trick package for you. Please scan the code to get it from me~

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