I was listening to the "Planet Money" podcast yesterday and they had this story on the Universal Postal Union (UPU). I honestly had no idea what the UPU was and had never heard of it. Logically, I guess I would have assumed such an organization existed but its not something I've ever thought deeply about. Here is the episode and transcript if you care to read/listen.
For those of you who don't know Click Here for the Wikipedia page. But basically, they are in charge of international mail laws.
In the Planet Money episode they start with a guy named Jayme Smaldone in New Jersey who sells the "Mighty Mug." Apparently it doesn't tip over or something. And he found out that there was a company who was selling knockoffs from China. And he decided to by one of these mugs that cost only $5.69 with FREE shipping from China.
And this all caused him to have this thought, sure you can make things more cheaply in China but how can you mail this all the way from China with free shipping? It cost an arm and a leg to ship anything domestically. And He wanted to know why and his idea was that there was a "secret" organization out there fixing lower prices for shipping internationally and giving an unfair advantage to businesses abroad.
Long story short, it turns out that he is kinda right. There is more information than I'm willing to type out about shipping costs and such but the summary of it is because of UPU reimbursement rates for shipping the final leg.
So, the example they give is if you or I wanted to send a three-quarter-pound package somewhere in the US, the US Postal Service would charge around $4.76 for the "last leg" of the journey. But for the same package coming from China they would only charge $1.39. This is true all around the world so this discrepancy used to actually net benefit the US but with the way email has replaced mail for smaller packages and how everything can be ordered online it has shifted.
There is more discussion in the podcast and I recommend it for anyone interested. I normally would have researched this outside of the podcast but haven't had time yet and figured it just be easier to post here and get your opinions/outsource my research on this.
What do you guys think?
For those of you who don't know Click Here for the Wikipedia page. But basically, they are in charge of international mail laws.
In the Planet Money episode they start with a guy named Jayme Smaldone in New Jersey who sells the "Mighty Mug." Apparently it doesn't tip over or something. And he found out that there was a company who was selling knockoffs from China. And he decided to by one of these mugs that cost only $5.69 with FREE shipping from China.
And this all caused him to have this thought, sure you can make things more cheaply in China but how can you mail this all the way from China with free shipping? It cost an arm and a leg to ship anything domestically. And He wanted to know why and his idea was that there was a "secret" organization out there fixing lower prices for shipping internationally and giving an unfair advantage to businesses abroad.
Long story short, it turns out that he is kinda right. There is more information than I'm willing to type out about shipping costs and such but the summary of it is because of UPU reimbursement rates for shipping the final leg.
So, the example they give is if you or I wanted to send a three-quarter-pound package somewhere in the US, the US Postal Service would charge around $4.76 for the "last leg" of the journey. But for the same package coming from China they would only charge $1.39. This is true all around the world so this discrepancy used to actually net benefit the US but with the way email has replaced mail for smaller packages and how everything can be ordered online it has shifted.
There is more discussion in the podcast and I recommend it for anyone interested. I normally would have researched this outside of the podcast but haven't had time yet and figured it just be easier to post here and get your opinions/outsource my research on this.
What do you guys think?
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