A Preliminary Evaluation of “Self-declared” Terminal Dues

In mid-2020, the Universal Postal Union (UPU) introduced “self-declared” terminal due rates for postal delivery of e-commerce goods weighing up to 2 kg imported via the international postal system. The normal system of “terminal dues”—what postal operators pay each other for delivery of inbound mail—fixed specific delivery rates for four-year periods. Normal terminal dues have been criticized since they lead to different charges for similar services for foreign and domestic mailers. Self-declared rates provided an optional alternative for substantial international postal flows. In principle, postal operators could annually set their own delivery rates for e-commerce goods at levels approximating 70% of retail domestic postage, immediately in some cases and over a transitional period in other cases. In practice, UPU rules governing self-declared rates have proven unduly restrictive. An analysis of 20 economically advanced countries shows that self-declared rates—both the permanent and transitional versions—deviate from the objective of 70% of domestic postage by more than 40% (either too high or too low). Although self-declared rates are, on average, significantly higher than normal terminal dues rates, they are only slightly better aligned with 70% of domestic postage. The chapter goes on to suggest that relatively minor adjustments to the rules governing self-declared rates could reduce average deviations from the objective of 70% of domestic postage to about 7%.