UPU rolls out a new undeliverable mail remuneration solution

As the e-commerce sector continues to grow, so too does the number of small packets in the mail stream. This, and increasingly stricter customs rules worldwide, is putting extra strain on Posts, especially for undeliverable mail. Up until January 2022, Posts were not remunerated when returning undeliverable letters and small packets under 2kg, to the origin post. This meant that the receiving post bore the handling and processing costs of sending mail back to its origin. 

In August 2021, UPU Congress adopted a new resolution which would see Posts remunerated when returning non-deliverable letter mail, including small packets. Congress also put in place a tight deadline – the new remuneration stream was to take effect from January 1, 2022.

With such a tight deadline in place, the UPU went to work on developing operational and accounting procedures to assist Posts worldwide in reporting undeliverable mail. The Operations and Accounting Review Group (OARG), a standing group of the Postal Operations Council (POC) committee 2, chaired by Australia and vice-chaired by Norway, oversaw the set-up of an accounting tool to handle the new remuneration stream.

For the operational part, a new mail subclass code was created: UV. “Posts needed to make sure they could recognize the new code in their operations and IT solutions by 2022. The accounting part was, however, more challenging to implement,” explains Jean-Marc Coëffic, Secretary of the OARG.

Traditionally, Posts prepare remuneration accounts for things like terminal dues per partner and send them individually. For the new undeliverable mail remuneration stream, the UPU International Bureau (IB) proposed to centralize the accounting process. 

“The concept for the solution is quite simple: instead of having each operator preparing and sending paper accounts to each partner, the IB generates the accounts and distributes them to all Posts,” explains Coëffic.

The centralized approach was made possible thanks to the fact that Posts exchange data (PREDES messages) on mail streams electronically. “Catching this data, storing it centrally, and ensuring that all calculations for the new remuneration stream were done correctly was challenging,” Coëffic continues. “With the first distribution of accounting forms for the first quarter in June, we proved that we had overcome these challenges,” he adds, noting that several challenges still need to be addressed to make the process even smoother.

Once the UPU has generated and distributed the UV accounts, Posts are then responsible for paying each other individually. The UPU has a solution which can assist operators with the settlement of their accounts: UPU*Clearing. It is used by 49 designated postal operators today and the UPU hopes many more operators will adopt it in coming years. 

The successful roll out of the new remuneration stream for undeliverable mail has provided a great example of how the UPU could offer more centralized services in the future, enabling postal operators to maximize their efficiency through cost and time savings. According to Coëffic, “The new approach brings benefits to the postal community larger than the new remuneration for returned mail, and this is a good motivation to face all the hurdles ahead.”