Cianiao, Alibaba’s logistics unit, announced on Wednesday that it reached a deal with the United States Postal Service to speed delivery of Chinese merchandise in the U.S.
This news comes as USPS is facing increasing scrutiny at home over lax security standards for international shipments, failure to collect customs fees, and what critics consider to be taxpayer subsidies given to incoming foreign shipments.
A new study out from Copenhagen Economics, a European consultancy in the fields of competition, regulation, international trade and impact assessment, found a substantial security risk in items being sent through the USPS from international shippers. Additionally, the study revealed American taxpayers lost $1 billion in revenue from the USPS failing to collect customs duties. The study was funded by the Coalition of Services Industries, a trade association.
According to one of the study authors, Bruno Basalisco, Ph.D. and Senior Economist at Copenhagen Economics: “Items worth over $200 are by U.S. law, subject to duty, and the number of package shipments will continue growing as the rise of e-commerce endures; yet our study found that none of the international postal shipments surveyed submitted any electronic data detailing the items being sent. The lack of intelligence about postal packages crossing over America’s borders seems to represent a real security and public income protection risk.”
Basalisco added that the USPS is costing U.S. taxpayers over $1 billion per year from a failure to collect customs duties. Peter Allgeier, President of the Coalition of Services Industries, explained: “When customs duties are not paid on merchandise, it puts domestic competitors at a disadvantage, as well as the commercial carriers whose customers are paying duties on their goods.”
The study found that USPS competitors, such as UPS and FedEx, made customs declarations 98 percent of the time.
The new study and the deal with Cianiao feed into other recent news that the USPS is giving foreign companies an advantage over domestic sellers. USPS subsidizes foreign shippers as a result of rates set by a United Nations body called the Universal Postal Union. It results in the USPS charging foreign shippers only $0.94 for a 4 lb. package being sent to an American consumer. Domestic companies would pay $11.30 for the same service, which gives companies in China and other countries a competitive advantage. USPS loses money (about $308 million in the past 5 years) on every foreign item sent into the U.S., and critics complain these costs are then passed on to American taxpayers.
InsideSources made repeated requests for comment from USPS on the security risks of their shipping practices, the failure to collect customs duties, and the shipping subsidies provided to foreign companies. USPS has declined to respond.
