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Postal Service revenue dragged down by inbound mail

U.S. manufacturers say there is a very real problem with delivering shipments from China.

The U.S. Postal Service currently collects below-cost payments, called terminal dues, to deliver small packages under 4.4 lbs. from international shippers. These payments, set by the United Nations Universal Postal Union, are being exploited, manufacturers say, by Chinese counterfeiters using e-commerce to flood the U.S. market with cheap goods, delivered at much lower cost than goods shipped domestically.

This imbalance hits U.S. manufacturers of small consumer products particularly hard, and has shot up the list of issue priorities for the National Association of Manufacturers, Patrick Hedren, vice president of labor, legal, and regulatory policy, told Bloomberg Government.

“We think that this can be dealt with. It simply hasn’t been challenged yet in the proper way,” Hedren said. “But there is no question that the rates provided to Chinese shippers are discriminatory compared with the rates that domestic shippers get,” he said.

The U.S. Postal Service has been losing money in recent years, reporting in November 2017 that revenues had decreased $1.8 billion since 2016.

Robert Taub, chairman of the Postal Regulatory Commission, which oversees the U.S. Postal Service, said the problems with the terminal dues structure are well known to regulators and have been festering for decades.

It wasn’t until the 1990s, when the commission began reporting on the costs incurred and rates charged by the U.S. Postal Service, that regulators caught on to the problem, Taub said.

The commission discovered then that the Universal Postal Union had set up an agreement in which there were winners and losers—where some countries’ postal services did not charge the same rate that their domestic users paid, Taub said.

“So, the post office in the U.S. was not fully recouping the cost of delivering these particular products for other nation’s posts,” he said.

“There’s a reason why in every annual compliance determination, we’re saying inbound letter post is underwater, losing money, and we consider it discriminatory because American mailers are paying for this, and these foreign posts are using our infrastructure and not paying any overhead,” Taub said

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