Quantification of Financial Transfers Caused by Universal Postal Union Terminal Dues - Copenhagen Economics

The Universal Postal Union (UPU) system of terminal dues governs payments between designated postal operators for the transport, sorting, and delivery of cross-border letter post items in the destination country. UPU rates are used by many postal operators across the world, both directly and indirectly (as a fall-back provision). In a report from September 20141, Copenhagen Economics identified three types of potential market distortions created by the current UPU terminal dues system:

1. Distortion of competition for (i) last-mile handling and (ii) first-mile handling of cross-border letter post items

2. Distortion of demand for (i) delivery within and outside the terminal dues system, (ii) domestic versus cross-border delivery, and (iii) cross-border delivery originating in transition versus target countries

3. Financial transfers between delivery operators

As a follow-up on the previous study, the Postal Regulatory Commission has asked Copenhagen Economics to conduct a quantitative analysis, estimating the magnitude of the third type of distortion: the financial transfers between designated postal operators currently using the terminal dues system.

Report: Quantification of Financial Transfers Caused by Universal Postal Union Terminal Dues

¹ http://www.prc.gov/sites/default/files/reports/The%20Economics%20of%20Terminal%20Dues_final%20report%20300914.pdf