When you mail a letter or small package (below 4.4 pounds) to another country, the U.S. Postal Service pays what is called terminal dues to the destination post for its share of processing and delivery of the item. It’s the same all over the world. Posts pay each other terminal dues to process and deliver cross-border mail.

Terminal dues have generally been kept artificially low — below domestic postage rates — because of a complex negotiation process. As a result, the Postal Service and other operators have lost money on international postal letters and packages received from abroad, especially from emerging countries like China. On the other hand, they have paid less than what it costs to deliver the item to countries with high postage rates like Norway.

These economic distortions are not new. For decades the Universal Postal Union (UPU) — the United Nations agency that governs the international terminal dues system — has been working to reduce the gap between terminal dues and domestic rates. The UPU’s one-country-one-vote decision-making system has made progress slow and difficult given countries’ widely divergent views and interests. The Postal Service has been able to negotiate with selected countries separate rate agreements that are more favorable than terminal dues — but this is just a partial solution.

With the influx of ecommerce packages, especially from China, some U.S. stakeholders have complained that Chinese online retailers have an unfair advantage over their U.S. counterparts because low international shipping rates afforded by low terminal dues allow them to ship goods to the United States for less than U.S. domestic rates. Private carriers competing with posts have also said they are disadvantaged because they don’t have access to low terminal dues. Congress considered the issue during a June hearing on terminal dues.

Our new white paper analyzes the terminal dues system and finds that in certain instances, low terminal dues benefit China Post and Chinese online retailers in the lightweight, low-value Air Mail package segment, at the expense of the U.S. Postal Service and American retailers. However, those packages can take 2-3 weeks to be delivered, and no tracking is available. When it comes to shipping heavier, higher-value packages requiring additional services, the rate advantage of low-terminal dues posts, such as China Post, decreases. In addition innovations in cross-border logistics create alternatives to the terminal dues channel, making it potentially less relevant.

The paper suggests an overhaul of the terminal dues system, and reviews reform measures under discussion.

Should the U.S. Postal Service charge the same rates for domestic deliveries and international deliveries of small packages from abroad? Do you think the rates postal operators charge each other to deliver inbound mail and small packages are better handled through commercial agreements among operators, or through global negotiations among governments?

Comments (9)

  • anon

    isn't this arrangement the definition of a cartel? i realize that USPS is exempt from anti-trust laws on the letter business, but it is not exempt from anti-trust laws on the competitive package business.... wouldn't this be breaking anti-trust laws?

    Jun 15, 2016
  • anon

    Some complaints seem more serious than mine but nevertheless I am pretty tired of my letter carrier and as most of you know there is little a taxpayer can do, if you complain they hang up on you and the poor babies can probably stop delivery all together claiming abuse. My carrier not only puts the mail in the wrong street boxes constantly but now after not having my outgoing mail picked up when the flag was clearly up, the carrier went speeding by on a late Friday afternoon and then I find out that the coddled union employees are not required to stop at a box if no mail is to be "delivered" at that particular address, this is new to me but perhaps true. My local Port Angeles post office, after my phone call, did however send a carrier up to collect my outgoing mail before closing and he was the one that told me that in other states where he has delivered, other than WA ST, he was instructed that he was not required to stop if no mail was to be "delivered." The law is vague, it speaks only to "delivery" only but...the party who would receive my mail also has a right then to receive their, "delivery."

    Dec 19, 2015
  • anon

    EK277274528US This the way Kalispell Mt handles complaints. Delivery was four days late and put in your competitors receiving box and if you read the post from social media team toys at that local post office think it's a joke losing mail that is!

    Dec 16, 2015
  • anon

    Hi Tony, Hello Carmen , Thanks for your message. Unfortunately, this issue falls outside of the jurisdiction of our office. As the Office of Inspector General (OIG), our role is to investigate waste, theft, fraud, and abuse within the Postal Service through our audits and investigations. Please call your local Postal Service Consumer Affairs office and they will be able to assist you.

    Dec 17, 2015
  • anon

    I find it very unreasonable that USPS raised click and ship rates over the two busiest days of Dec shipping. The site could not be used but when it finally came back online the package I needed to shipped had taken a drastic leap in cost. Changes in cost could have waited until the first of the year. Also no insurance available on items to Israel tells me that USPS like most of us don't trust US postal authorities as well as Israeli postal or custom personnel.

    Dec 16, 2015
  • anon

    Terminal fees should not affect large packages as was suggested when I told a postmaster that I was very upset that USPS had gone off line for two days (click and ship) and returned after fees were raised severely. If charges must be increased there is no reason it could not be done after the first of the year, not the days of greatest shipping.

    Dec 16, 2015
  • anon

    Get Easy Tracking Updates ÔÇ║ Sign up for My USPS. Only applicable to visual users. More Details Less Details Tracking Number: 9114999944314103245747 delivered ÔÇó Updated Delivery Day: Monday, December 14, 2015 Product & Tracking Information Postal Product: ÔÇó Features: o USPS TrackingÔäó Date & Time Status of Item Location December 14, 2015 , 3:16 pm Delivered, In/At Mailbox COLORADO SPRINGS, CO 80918 Your item was delivered in or at the mailbox at 3:16 pm on December 14, 2015 in COLORADO SPRINGS, CO 80918. December 13, 2015 , 12:18 pm Arrived at Hub COLORADO SPRINGS, CO 80918 December 12, 2015 , 1:59 pm Arrived at USPS Origin Facility DENVER, CO 80217 December 11, 2015 , 11:21 am Out for Delivery COLORADO SPRINGS, CO 80918 December 11, 2015 , 11:11 am Sorting Complete COLORADO SPRINGS, CO 80918 December 11, 2015 , 6:28 am Arrived at USPS Facility COLORADO SPRINGS, CO 80918 December 10, 2015 , 10:51 pm Arrived at USPS Origin Facility DENVER, CO 80217 December 10, 2015 , 3:44 am Departed USPS Facility COLORADO SPRINGS, CO 80910 December 10, 2015 , 2:29 am Arrived at USPS Origin Facility COLORADO SPRINGS, CO 80910 December 8, 2015 , 9:56 pm Arrived at USPS Origin Facility AURORA, CO 80011 December 8, 2015 , 5:56 pm Picked Up COLORADO SPRINGS, CO 80917 Why did the USPS deliver a package I mailed on December 8, 2015 back to me on December 14th after traveling to Denver and back to Colorado Springs 3 times? And After I hand delivered the same package to the Postal Carrier on January 15th (who inspected the package and said there was nothing wrong with it) took the package and deposited into the outgoing parcel box. The USPS has not entered the package into the tracking system. I am very disappointed with the USPS service. It is no wonder USPS is losing customers to UPS and FEDEX.

    Dec 16, 2015
  • anon

    I think at least if I send a package to costa rica to a post office box as a childs gift that costs $63.51to send, whereas same lacmage here domestic costs $10 or $12, they can at least put it in p, o, box in one town Jaco and not send to customs in Puntarenas another town. Now I pay $63.51 and they are inconvenienced to have to travel additionally an hour away. Why? It is marked as children clothes and toys for $38. Where is all this extra postage going to, Dudes its like $50 more than domestic. Thry pay fees for post office box and have yo travel additional when I pay 50 dollars extra and they have to pay gas at 6dollars a gallon.heloooooooo?

    Dec 14, 2015
  • anon

    let them have this for now,then look at it again in 2 years

    Dec 14, 2015

Recent Comments

  • 9 hours 10 min ago
    Are delivery drivers allowed to not attempt delivery of your package because their car was too full and they didn't have room for your larger boxes? I've received 2 notices via e-mail that...
  • 11 hours 17 min ago
    Let's see Amazon special deals. First there is Sunday delivery in many districts. And then there is the money back guarantee if not delivered by 8PM., Money back is only given to express mail...

Share this post


Monthly Archive