• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Postal Rate Changes Will Test China’s Cross-Border E-Commerce
Analysis

Postal Rate Changes Will Test China’s Cross-Border E-Commerce

May 1, 2020
Paul Steiner, SCB Contributor
With online sales of $1.94 trillion in 2019, China boasts the largest e-commerce market in the world — more than 50% of the global total. New rules in cross-border e-commerce, however, could change the market this year.

Cross-border e-commerce has flourished in recent years, thanks in part to low shipping costs from China to the United States and other countries — which have made it easy and affordable for Chinese companies to reach consumers worldwide. The impetus behind this shipping boon also lies in the rise of online marketplaces, such as Amazon and Alibaba, as well as the favorable shipping rates granted to China by the Universal Postal Union — the 192-country organization responsible for setting shipping rates from country to country. 

The UPU often favors developing economies with lower rates. Unfortunately, the organization’s classifications for member countries have not kept pace with the evolution of global commerce. As a result, despite having the largest retail market in the world, China was still designated as a “developing” nation, and therefore given cheaper rates. This meant packages originating in China cost less to ship to U.S. consumers than packages originating from, and traveling within, the U.S. 

Because of this disparity, the U.S. argued the policy gave China an unfair advantage in cross-border e-commerce shipments, and threatened to leave the UPU if the organization did not grant the U.S. the ability to set its own terminal dues. This resulted in the signing of a new deal — referred to as “Option V” — in September 2019, allowing the U.S. to set its own postal rates for imported parcels weighing fewer than 4.4 pounds. The deal also allows nations importing more than 75,000 metric tons of parcels to adjust their rates beginning in July 2020, with a second set of countries self-declaring new rates in January 2021.

These reforms will lead to significant price increases for shipments from China to the U.S. In fact, according to the Chinese Post Office, fees paid by China to the U.S. and other countries to deliver packages will nearly triple through 2025.

The effect of these rate increases will be felt by Chinese companies, particularly small e-commerce businesses, which may be forced to increase prices on cross-border shipments to combat higher shipping costs. This could steer away U.S. customers who were willing to overlook slower delivery, but only in favor of cheaper items and free shipping. Larger Chinese retailers will likely be less affected by the changes, as they often have sophisticated logistics operations with warehouses located around the world.

While the days of purchasing cheaper products from China certainly aren’t over, this new deal will help even the shipping-rate playing field. And even with significant price hikes for Chinese companies shipping to the U.S., China’s cross-border e-commerce market should remain strong. We’ll see a more competitive international marketplace — and a growing number of companies looking to mitigate shipping costs with other supply-chain optimization strategies.

Paul Steiner is vice president of strategic analysis at Spend Management Experts.

RELATED CONTENT

RELATED VIDEOS

KEYWORDS China E-Commerce/Omni-Channel
  • Related Articles

    In May 2017, China to Re-Impose Restrictions on Cross-Border E-Commerce Shipments

    Cross-Border E-Commerce Booms in China

    Cross-Border Hubs Hustle to Keep Up With E-Commerce Demand

Paul Steiner, SCB Contributor

Postal Rate Changes Will Test China’s Cross-Border E-Commerce

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Biden Sees Fast Rollout of J&J Vaccine; Astra CEO Defends Delivery Shortfall

    Coronavirus
  • West Coast Port Congestion

    Shippers Need Alternatives to West Coast Port Congestion

    Logistics
  • Mexico

    The Near-Shoring Trend: Will China’s Loss Be Mexico’s Gain?

    Logistics
  • Robotic automation

    Autonomous Supply Chains Are on the Horizon

    Coronavirus
  • Drugmakers

    Research Lays Groundwork for More U.S.-Made Drugs

    Coronavirus

Digital Edition

Scb feb 2021 lg

2021 Supply Chain Management Resource Guide

VIEW THE LATEST ISSUE

Case Studies

  • Remote Implementation: A Dose of the Right Medicine for B2B Pharmacy

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact Geodis GEP
Honeywell Intelligrated Infor Logility
Magnitude Software MPO Old Dominion
Oliver Wight OpenSky Ports America
Purolator QAD Precision Red Classic
Riskmethods Snapfulfil TGW Systems
Transportation Insights Watson Land Company Westfalia Technologies
Workjam Yang Ming  
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2021 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing