Why Is Postage From China So Cheap

Ever marvelled at the incredibly low shipping rates of products from China and wondered why is postage from China so cheap?

The cost of shipping from China is significantly cheaper due to a treaty from the United Nations’ postal agency (UPU) that categorizes China as a developing country and therefore sets lower parcel rates. Additionally, bulk packaging and low labor and warehouse costs contribute to the astonishingly low postage rates.

Keep reading to uncover more about this surprising postal phenomenon from the world’s largest manufacturing hub.

Unveiling the Mysterious Low Prices: A Chat with International Postage

The shockingly low international shipping fees from China have sparked interest and questions among many online shoppers worldwide. Owning to the incredible difference in pricing, questions about the economics of these cheap shipping charges have become a topic of interest. So, what exactly is the driving force behind China’s affordable shipping? Let’s unravel the mystery.

One key factor is that China is part of the Universal Postal Union (UPU). This international organization established fixed fees for international mail exchange between member countries. This agreement, initially beneficial for fledgeling economies, has markedly favored China due to its exponential economic growth and massive manufacturing sector.

The UPU classifies countries in a three-tier system, with China classified as a category 2 or ‘transitional’ country. This classification means that China pays significantly lower fees, resulting in cheaper postage costs for packages destined to countries designated as ‘developed’, including the United States and many European countries.

UPU TierCountry ExampleFee Comparison
1 (Developed)United States, UKHigher
2 (Transitional)ChinaLower
3 (Developing)India, South AfricaLower

Another factor is the subsidized ePacket service agreement between China Post and USPS, which allows Chinese merchants to deliver small packages overseas at significantly reduced rates. These incredibly low shipping charges make it possible to buy a product from China and have it shipped to your doorstep cheaper than sending a similar package domestically in many countries.

The sheer volume of packages coming from China also plays a role. The massive number of packages being sent allows for economies of scale, which in turn lowers costs, leading to even more inexpensive shipping prices.

In summary, multiple factors interplay to enable such low China-originated shipping rates, including international agreements, specific postal deals, and scale of operation. This situation enables international customers to purchase items from China at impressively affordable prices, including shipping costs.

Decoding the Postage Cost Factors

One might question how postage from China, over thousands of miles away, can cost less than shipping a package across one’s own country. The secret lies in various factors like weight, distance, and some unique international agreements. Let us delve more into these factors:

The Role of Distance in Postal Costs

Surprisingly, distance is not always directly proportional to postage costs. For instance, shipping rates within the United States are more influenced by the package’s weight and its dimensions than the actual distance it is being shipped. Conversely, when it comes to international shipping, it’s a different ballgame. International shipping costs are more aligned with the distance of travel, therefore, shipping something across the globe might be expected to cost more. However, this isn’t always the case with China.

The Weight Factor: Thinnermail’s Big Break

E-commerce businesses in China often use a unique mailing strategy known as “Thinnermail.” This strategy, employed mainly by the country’s electronic manufacturing industry, involves enclosing items in extremely thin packaging, thereby reducing the weight and size of the parcels being shipped. As the cost of postage is directly related to weight, this method substantially reduces the shipping costs.

Subsidium: How International Agreements Affect Postage

A significant factor in China’s low postage costs is an arrangement called the Universal Postal Union (UPU). The UPU, formed in 1874, is an international mail exchange organization that sets the rules for international mail exchange and financial compensation between countries. Under this agreement, some developing countries are provided with discounts to ensure access to mailing services.

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China, despite being a major global economy, is still classified as a “transition” country – a legacy from when it joined the UPU in 1914. This means it is entitled to receive substantial discounts on international postage compared to developed countries – a system known as “terminal dues.” This arrangement, designed to support developing countries, explains to a large extent why postage from China seems so affordable.

Diving into UPU: The World’s Postal Network

In order to understand why it’s so cheap to mail things from China, we first need to dive into the somewhat complicated world of the Universal Postal Union (UPU), which is the body that governs international mail. The UPU establishes the rules for international mail exchange and sets the framework for postage rates between different countries.

Moving Mountains of Mail: Transit and Sorting

A lot of work goes into getting a letter or package from one place to another. After an item has been mailed, it is typically transported to a regional sorting center in the sender’s country. From there, it gets sent to a sorting center in the recipient’s nation, and then finally to the recipient’s local post office.

Flying Letters: Air Mail vs Sea Mail

If the item is being sent by air mail, it will typically get to its destination more quickly, but the costs are higher. On the other hand, sea mail is significantly cheaper but takes much longer, as the item has to be transported by ship. Interestingly, China Post, China’s national postal service, has one of the biggest shipping networks in the world, which allows it to offer very cheap international shipping rates.

Night owls of Sorting: How Mail Reaches you

No matter whether an item is sent by air or sea, once it arrives in the recipient’s country it has to go through customs to ensure that it adheres to local laws and regulations. Then it’s off to the local sorting center, where it’s sorted based on the postal code. The last step in the journey is when your local postal worker delivers the item to your doorstep or mailbox.

Understanding Terminal Dues: The Backbone of International Mail

One of the main reasons why postage from China is so cheap is because of something called terminal dues. Terminal dues are the fees that postal services charge each other to deliver mail. The UPU sets the rates for these fees, and they have historically been set quite low for developing countries, including China. This means that China Post is able to send mail to other countries at a much lower cost than those countries are able to send mail to China.

This system has been criticized as being unfair, and in recent years there have been efforts to rebalance the terminal dues system. However, for the time being, it remains a major factor in the cost of international postage and is one of the reasons why postage from China is so cheap.

China’s E-commerce Boom: The Small Packet Phenomenon

The boom in China’s e-commerce industry has resulted in a unique phenomenon known as the ‘small packet’. Coined by e-commerce giants like Alibaba’s AliExpress, the idea behind the ‘small packet’ is to ship small, individual packages directly from manufacturers in China to consumers overseas. This has revolutionized the traditional supply chain model, bypassing both local wholesale distributors and retailers.

Online All the Way: Why AliExpress Shipment is Cheap

AliExpress, one of the largest online retail marketplaces in the world, is at the heart of this revolution. It hosts thousands of small and medium-sized manufacturers and traders in China, who ship their products directly to consumers abroad. This direct-from-manufacturer model reduces multiple layers of intermediaries, which traditionally inflate the product and shipping price. This allows AliExpress and other similar platforms to offer incredibly cheap, and sometimes even free, shipping from China.

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The Power of Volume: A High Quantity Game

Another key factor behind the cheap postage from China is the sheer volume of packages being shipped daily. Thanks to the ubiquitous nature of e-commerce in China, the volume of small packets being shipped every day is colossal. This enables courier companies to achieve economies of scale, substantially bringing down the shipping cost per package.

To illustrate, here are some figures from China’s General Administration of Customs. In 2014, about 27 million small packets were shipped from China daily. By 2018, this number had skyrocketed to more than 180 million. This exponential growth in volume helped to drive down the shipping cost considerably.

Small Packet Shipment from China (2014 – 2018)
YearDaily Shipments
201427 million
2018180 million

This high-volume, low-cost model has transformed the logistics industry, allowing consumers to buy cheap products directly from China with minimal or no shipping cost. Thus, explaining the economic marvel behind dirt-cheap postage from China.

The Flip Side: Is Cheap Postage Always Good?

While on the surface, cheap postage from China appears beneficial for consumers due to lower product prices, there are significant concerns that need to be considered. This cheap international mail has a substantial impact on several areas like the environment and local businesses.

The Environmental Impact of Cheap International Mail

Cheap postage promotes the shipment of more items and increased trade, which means more transportation and subsequently, larger fossil fuel emissions. As per a study by the International Council on Clean Transportation, shipping-related CO2 emissions are projected to increase by 50%-250% by 2050, primarily driven by increasing demand for shipping goods across the world.

The packing materials often used to ship products also contribute to global waste. Packaging materials usually consist of plastic, which ends up in landfills and oceans. In fact, a report by the Ellen MacArthur Foundation states that by 2050, plastic in the oceans will outweigh fish, making this a critical concern for environmental conservation.

The Concern for Local Businesses: Unfair Advantage?

On the other hand, the cheap postage from China also poses a threat to local businesses. These businesses may struggle to compete with prices of goods shipped from China due to the high cost of domestic postage. The result? An unfair advantage that threatens the survival of local markets.

As an example, let’s consider the United States. The cost for a U.S. business to send a 1lb package within the country can range from $2.66 to $10.28 depending on the shipping method, distance, and package size, as per data from Shipping School. However, an online retailer in China may ship a similar package halfway across the world to the U.S. for less than $2, a price domestic businesses cannot compete with.

This advantage, combined with the low labor cost and mass production capabilities in China, creates a challenging environment for local businesses. As a result, many find it hard to compete which might cause some to shut down, impacting local employment, taxation, and economic stability.

Reevaluating the UPU System: Time for Change?

One of the key reasons postage from China is so cheap is largely due to the Universal Postal Union (UPU) system. The UPU is a United Nations agency that helps co-ordinate postal policies between member nations, which might explain why parcels from China are often much cheaper to post than the same item would be in the United States, for example. However, as the global balance of trade shifts, this system has come under scrutiny. Some argue that it may be time for a change.

Reevaluating the UPU System: Time for Change?

The UPU was established way back in 1874 to ensure the smooth operation of international mail networks. Under the system, postal authorities in different countries pay each other termination fees to deliver mail from overseas. Historically, this process has largely been to the advantage of countries in the developing world, including China, where labor costs and infrastructure investments have been lower. However, as the global economic landscape changes, questions about the fairness of the UPU’s Terminal Dues system continue to arise.

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Pressure Points: Areas in Need of Reform

There are several key areas where postal stakeholders assert the UPU system is outdated and needs reform. These include:

  • Unfair Cost Advantage: One criticism is that the UPU system gives countries like China an unfair advantage because they can export large volumes of goods at low rates, potentially undercutting businesses in import countries.
  • Changing Economies: The UPU system was created at a time when many of today’s powerful economies were still in development. Now, several countries classified as ‘transition’ or ‘target’ countries under the system, like China, are now major economic players. Critics argue that the classifications should be changed to reflect these realities.
  • Impact on Domestic Postal Services: Some argue that the UPU’s lower international rates can strain domestic postal services. That’s because they often deliver imported packages at less than the cost of delivering domestic packages of the same size, resulting in financial losses.

While the UPU has played a significant role in facilitating global trade, it’s clear that many stakeholders believe the system needs to adapt to the current economic realities. It’s a complex issue, but one that will undoubtedly affect businesses and consumers globally as ecommerce continues to grow.

New Players, New Rules: Private Logistical Companies’ Evolution

In the world of global e-commerce, shipping rates have a significant impact on business. One remarkable aspect is how cheap it is to send packages from China to the rest of the world. How is this possible? Much of it is due to the evolution of private logistical companies and how their commercial rates rival traditional postal services.

Over the past few years, private post and logistics companies from China like SF Express, STO Express, and YTO Express have revolutionized the market. These companies emerged as fierce competitors for China Post, the state-owned postal service, both in terms of speed and cost. Private companies, with their innovative service models, have more freedom to choose their methods, policies, and rates. Consequently, they are able to offer lower prices.

A significant part of these private companies’ competitive edge is attributed to their commercial rates. Commercial rates are the discounted postage prices that large-scale mailers – including private logistics companies – can access. These rates are lower than the prices you’d pay at the post office, or the ‘retail prices’. These companies qualify for commercial prices because they presort their mail, i.e., they group their items by zip code before handing it over to the postal services. Presorting saves postal services time and money, therefore they provide discounts on postage.

Besides, the Universal Postal Union (UPU) also plays a crucial role in why postage from China is so cheap. The UPU, a specialized agency of the United Nations, regulates international mail exchanges. Countries are categorized into different groups, with group one – including China – benefiting from lower rates than other countries.

Here we can see a comparison between a typical shipping rate from a Chinese private logistic company, such as SF Express, and the US Postal Service:

CompanyPrice to send 500g packageDelivery Time
SF Express$4.482-4 days
US Postal Service$23.753-5 days

As you can see, commercial rates and international regulations play a significant role in making Chinese postal rates incredibly competitive. This is beneficial for businesses and consumers, as it allows for the cheap transportation of goods globally.

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