PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council Applauds President Trump’s Action on Unfair Shipping Rates for U.S. Small Business

By at 24 August, 2018, 10:11 am

NEWS

For Immediate Release

Washington, D.C. – The Small Business & Entrepreneurship Council (SBE Council) applauded a  Presidential Memorandum signed by President Donald Trump on August 23, addressing a severe competitive imbalance that gives foreign shippers favorable rates for packages sent into the U.S., which are far lower than what U.S. small businesses are charged to ship packages domestically.  Discounted shipping rates provided by the United States Postal Service (USPS) to foreign shippers are putting America’s small businesses and entrepreneurs at a competitive disadvantage, according to SBE Council president & CEO Karen Kerrigan. She says action must be taken to address this disparity to create a level playing field for U.S. entrepreneurs and small businesses.

“American small businesses continue to be competitively impacted by the big disparity in shipping rates given to international competitors. Foreign companies are charged much lower rates by the U.S. Postal Service to complete deliveries into the U.S. in comparison to the prices that American small businesses must pay to send items from one domestic location to another. We applaud President Trump for recognizing this gross imbalance and its impact on American small businesses, and more importantly directing the State Department to take action by negotiating a fair deal for the U.S. and our small business community,” said Kerrigan.

The Presidential Memorandum titled “Modernizing the Monetary Reimbursement Model for the Delivery of Goods Through the International Postal System and Enhancing the Security and Safety of International Mail” is directed to the U.S. Secretary of State, Secretary of the Treasury, Secretary of Homeland Security, the Postmaster General and the Chairman of the Postal Regulatory Commission.

The U.S. is part of the Universal Postal Union (UPU), an international body that sets terminal dues, which are the fees that postal operators pay each other for the domestic delivery on inbound international mail. These pricing procedures not only put small businesses at a competitive disadvantage, but also reportedly create a loss for the USPS.  U.S. representatives from the State Department engage in these negotiations, and according to SBE Council comments submitted to the USPS Commissioners:

“Regrettably, U.S. representatives from the State Department have not been adequately instructed by the Postal Service leadership to achieve pricing formulas that translate to operations that produce, at a minimum, revenue neutral results. The USPS latest ACR data reveals yet another substantial loss of $170 million on inbound letter post. Furthermore, the most recent indications from the State Department reveal major, unsatisfactory efforts to address this uneven and unfair ‘playing field’ facing the nation’s small businesses.”

The UPU will meet in Ethiopia in September, and the Presidential Memorandum directs U.S. negotiators to produce terminal dues rates that:

(A)  fully reimburse the USPS for costs to the same extent as domestic rates for comparable services;

(B)  avoid a preference for inbound foreign small packages containing goods that favors foreign mailers over domestic mailers; and 

(C)  avoid a preference for inbound foreign small packages containing goods that favors postal operators over private-sector entities providing transportation services.

If negotiations from the UPU meeting do not yield these results, the memorandum states that “the United States will consider taking any appropriate actions to ensure that rates for the delivery of inbound foreign packages satisfy those criteria, consistent with applicable law.”

Reports have indicated that shipping one parcel from China to some east coast U.S. destinations – at distances of 7,000 miles or more – costs $3.66 for USPS delivery. For shipping within the U.S., the same one pound package would cost at least $7.20. This figure is based on new Flat Rate Box pricing that went into effect earlier this year on January 21st.

“American small businesses are not afraid to compete with businesses in China or anywhere in the world. They embrace competition and free enterprise. But governments and governmental bodies must stop enabling inequities and behaviors – such as unfair shipping rate policies or the theft of intellectual property – so that U.S. entrepreneurship and small business growth can flourish. Fair policies that do not distort markets or promote favoritism will also help entrepreneurship flourish across the globe. We look forward to action that corrects the competitive imbalance in shipping rates,” added Kerrigan.

Read background on the UPU and terminal dues here.

Learn more about the secretive price setting and the UPU in this August 1, NPR Planet Money episode: “The Postal Illuminati”

Related SBE Council Content:

Comments to the Postal Regulatory Commission on Shipping Rate Parity for Small Businesses, July 2, 2018. 

Comments to USPS on Unfair Advantage Foreign Shippers Have Over U.S. Small Business, February 20, 2018. 

Postal Service Needs to Get Back to Basics, Kerrigan Op-ed in Morning Consult. 

 

CONTACT:  Karen Kerrigan

kkerrigan@sbecouncil.org  

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years SBE Council has worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil 

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