Blasting US Express Barriers

The U.S. International Trade Commission found that in addition to postal competition, U.S. express delivery companies are impeded abroad by unfair postal competition, inefficient customs practices, costly restrictions and tough barriers against entering new markets in the first place."We believe this study, which highlights the importance of reducing foreign barriers to express delivery services, now can be used by U.S. negotiators in ongoing and future trade negotiations to obtain strong commitments for our industry," UPS spokesman David Bolger said.The study comes as the United States is in tough aviation treaty talks with the European Union that include discussion of air cargo liberalization and as U.S. operators are complaining that their freedom to operate in China is hemmed in by a regulatory structure aimed at protecting state-owned China Post. Some air cargo operators would like their services covered under the World Trade Organization but with the WTO process stalled that isn't likely to happen soon.The ITC study could provide a framework for larger trade negotiations, however, and for more limited aviation treaty talks between nations."It's more to put the issues out on the table, where the weaknesses are, where the areas of concern, the greatest areas of need," said FedEx spokeswoman Kristin Krause. "Obviously it will be helpful in government-to-government talks between countries on the list."The study focused on the biggest four of the American air cargo carriers in a $50 billion air express industry the ITC said employs 519,000 people. The commission looked at FedEx, UPS, BAX Global and Menlo Worldwide. The agency undertook the six-month investigation at the request of Rep. Bill Thomas, R-Calif. Thomas reportedly issued the request at the behest of FedEx and UPS."Demand for express delivery services is increasing rapidly as a result of electronic commerce growth, the internationalization of business, and rising demand by manufacturers for outsourced logistic services," the 140-page report found. "U.S.-based express delivery providers increasingly compete with foreign postal firms that provide express delivery services in addition to monopoly-protected letter mail delivery services."The report found that foreign postal laws in many countries favor local postal services, some of them government-run and others private."In such instances, competition may be impeded by anti-competitive monopoly practices, such as postal firms' use of profits from monopoly-protected services to support services offered in competition," the report reads. "U.S.-based express delivery service firms also face impediments in the form of operational restrictions, investment limitations, discriminatory access to essential facilities, and poor customs environments."ITC Services and Investment Division International Trade Analyst Michael Nunes, who led the report's production, said that even perceived customs improvements would increase U.S. exports to some countries up to 17 percent. The report concluded that air would benefit more than other transportation modes with improved customs clearance procedures due to the time-sensitive nature of the business.The paper addressed in detail the complaints levied by Atlanta-based UPS and Memphis-based FedEx that the operations of DHL, under the ownership of German postal service Deutsche Post World Net, presents unfair competition in the air express market.Deutsche Post spokeswoman Holly Arthur said that although the report examined barriers U.S. companies face, DHL also can benefit from the findings because it faces many of the same barriers around the world."I think taken at face value, this is a very valuable negotiating tool for U.S. negotiators when they go into markets with barriers," she said.Still, she said, "We just hope FedEx and UPS don't turn the words around."The study suggests trade agreements as an important mechanism to leveling the playing field for U.S. express companies operating around the globe. It credits the recent free trade agreements the United States signed with Chile and Singapore as steps that will give express companies more international opportunities.