The upcoming UPU Congress in Dubai has the very important task of approving proposals that will further modernize and integrate the way postal operators pay each other for the handling and delivery of international mail.
The make-up of the mail is changing rapidly, calling for agile, adaptative changes in the way the handling and delivery of international postal items are remunerated. This is critical to ensuring the sustainable provision of universal postal services, both by origin and destination postal operators designated by their governments to uphold the service through the UPU’s network – also known as designated operators.International letter-post flows, once mainly constituted of documents, have witnessed a shift towards items containing goods as consumers around the globe engage more in cross-border e-commerce.
The profile of international mail flows is rapidly changing. While a 2018 UPU study looking at the make-up of international mail showed an increase in lightweight items containing goods travelling through the letter-post stream, the 2023 edition of the same study revealed a shift to heavier items and a decrease in volumes.
As e-commerce platforms turn to warehousing models in destination countries to cut costs, international mail flow volumes have decreased, putting the ability of designated operators to continue providing universal services at risk.
The UPU’s response to such postal market developments and trends is the Integrated Remuneration System (IRS) – a raft of proposals that seeks to further modernize and integrate the UPU remuneration systems to ensure that UPU rates cover handling and delivery costs, remain affordable and accessible, and are harmonized across the entire UPU postal product portfolio.
Guided by mandates given by the 2021 Abidjan Congress, these proposals are the product of extensive study and work carried out by the technical bodies of the UPU’s Postal Operations Council and Council of Administration.
Changes proposed
In order to reflect the actual costs of international mail handling and delivery, the IRS shifts the focus from item format to content: documents vs. goods. The separation of postal items on the basis of their content facilitates fairer remuneration that is more reflective of the composition of each individual mail flow. It also improves the system’s accuracy by furthering the principle of remuneration on a per-item basis, rather than a per-kilo average – accounting for the shift in content and associated weight variability.
In the case of small packets remuneration, the IRS proposes that it be based on the exact number of items received. In the case of parcels remuneration, the IRS will effect some fundamental changes. Destination designated operators will in future be able to self-declare the rates they charge the sending designated operator based on their domestic tariffs applicable to similar domestic services.
The transition will take place steadily, gradually phasing out the current inward land rates system in favour of this new self-declared approach for remunerating parcels. Importantly, the IRS also proposes to link the quality of service for the delivery of parcels with their remuneration to incentivize their reliable and predictable delivery. The latter is vital to meeting the needs of e-commerce platforms, sellers, customers and consumers worldwide.
If adopted, the IRS would also bring the UPU’s network closer to a globally uniform system where all designated operators would apply the same remuneration methodology. In an increasingly competitive e-commerce driven marketplace, where customers and platforms easily switch between delivery service providers, the IRS will put the UPU in a firmer position to effectively cost the delivery of every single small packet and parcel traveling through its network.
Finally, the IRS also ensures the right to affordable access to international postal services, by expressly addressing the special situation of low volume countries and those whose domestic reference tariffs are set with social objectives in mind.
Learn more about the 28th Universal Postal Congress here.