Thursday, December 27, 2018

The U.S Subsidizes Chinese E-Commerce Postage So They Can Ship For Free

So I've started trying to divest myself of stuff. We have a slew of very cool vintage, antique, and ethnic clothing, knickknacks etc that we accumulated over the years during all our travels abroad.  At one point in time, eBay was a great option for selling. Actually, up until Barack Obama became President, a cool vintage item could start a bidding war that netted some very hefty prices. Then the economy tanked and no-one was spending much money on those kinds of things, so I stopped selling. Now I'm back at it and was gob-smacked to discover that people were selling goods like vintage ethnic hand fans for under a dollar with free shipping to boot. I couldn't figure out how they could make any profit with 10% eBay fees deducted plus the cost of postage until a friend asked if they were being shipped from China, and indeed the bulk of the listings for "vintage fans" were being sent from China. It made even less sense considering how much it costs to post something overseas. Then she sent me the link to a 2017 Forbes article regarding shipping from China, and suddenly it all made sickening sense.

Did you know that the Chinese receive subsidized postage?? Courtesy of the good old U.S.A?? I didn't.

According to the Forbes article:

These super low shipping rates are being subsidized by the U.S. Postal Service. Yes, the United States and, in a roundabout way, the U.S. taxpayer is footing the bill so that Chinese merchants can ship their products to the USA for dirt cheap, essentially losing millions to support a dynamic where domestic American businesses are being undercut by foreign merchants who are immune to any and all intellectual property and consumer safety laws.

And when did this happen? Under Obama's watch!

In 2011, the U.S. Postal Service made special agreements with the national postal carriers of China and Hong Kong (and subsequently South Korea and Singapore) to allow tracking-enabled packages not exceeding 36” or weighing over 4.4 pounds to be sent to the U.S. for extremely low rates. They called this shipping option the ePacket, and the rates are so low that it's cheaper to ship small parcels from China to an American city than it is to send that same parcel domestically.

So basically, shipping a 1 pound package from New York to Beijing cost around $50 back in 2017, whereas the cost for a Chinese merchant to ship that same 1 pound package to NYC was a mere $3.66! No doubt, the U.S. postage rates are more now, and the Chinese are still offering free shipping.

Thank you Obama.

The shipping inequality has created a huge trade imbalance especially for those international e-Commerce businesses operating in this country. There's no way to compete.  And it costs our country money:

The impact of this international postal rate imbalance for the USPS is dire. As pointed out in an article on the Washington Post, the USPS loses around a dollar on each ePacket coming in from China. The USPS Inspector General admitted that his agency lost $75 million handling mail from foreign shippers in 2014 alone.

Who knows how much more we have lost in the four years since.

And did you know that international postal rates are set by the United Nations?? I didn't.
International postage rates for incoming packages are set by a U.N. agency called the United Postal Union (UPU). This is a body that was established in 1874 -- subsequently being absorbed into the U.N. -- that is currently made up of 192 countries which meets every four years to revise its policy and set new terminal fees, with each country getting one vote a piece. While the voting system of the UPU is egalitarian, the shipping rates that it sets are not.

This is crazy. Thank God Trump is trying to do something about trade imbalance. Not that there is much we can do about the shipping travesty, since apparently we could do away with the ePackets, but then China would revert back to the UPU fees, which are even less.

Read the Forbes article for all the details re how unfair this all is. It will make your blood boil.

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