Why is it cheaper to ship a product from a factory in China than to send a package to your neighbor?

By September 26, 2018 International Shipping No Comments
cheaper to ship a product from a factory in China

In a recent interview with NPR’s Planet Money, Platform88 client and Mighty Mug co-founder, Jayme Smaldone, discussed the unfair practices of the international shipping system and how it affects small businesses in the United States.

“Jayme Smaldone has been telling anyone who will listen that something is wrong with international shipping.“ Kenny Malone, Host, PLANET MONEY”

The Universal Postal Union is a part of the United Nations and was created to manage cross-border shipping and establish international postal standards. The UPU sets standard prices for shipping from one country to another, which are often below the domestic market cost.

To ship anywhere in the United States, the United States Postal Service charges China Post $1.39. However, for a US resident to ship the same package anywhere in the United States, it would cost them $4.76.

This is referred to as a “reverse trade barrier” because it reduces the price of foreign goods and incentivizes the consumer to buy international over domestic brands.

For Jayme, this has been affecting business. Chinese factories making knock-off Mighty Mugs have been taking business from the company. Their lower unit cost is due in part to the below-market freight rates the factory will pay to ship directly to the US consumer.

In response to the conversation of unfair international shipping standards in the media, the Trump Administration has urged the UPU to amend the current system at its upcoming meeting in November.

Click here to listen to the full podcast.

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