Should the lower shipping prices from China to the US end ?

An article in the Wall Street Journal (October 17, 2018) titled “No More Mail Privilege for China as U.S. to end deep discounts in packages” describes the classification of China as a “tier 3” country while the U.S. is a “tier 1” country, thus permitting subsidized postal rates, from 40% to 70% reduced rates, from China to the U.S. These shipments are small packages, weighing 4.4 lbs or less,from auto parts to jewelry to housewares. Does this one way subsidy provide an unfair advantage to Chinese companies over the US or a reduction in supply costs for users of these products ? Will making the transport costs symmetric in both directions result in fairer supply chain flows ? Should similar actions be taken with Singapore and other countries too ?

About aviyer2010

Professor
This entry was posted in consumer, Cost, delivery, Global Contexts, logistics, manufacturer, Prices and tagged , , , . Bookmark the permalink.

One Response to Should the lower shipping prices from China to the US end ?

  1. Kyle Harshbarger says:

    The math on this is pretty simple. A product on the margin has a cheaper total cost being made in China.

    It sounds like this cost is an artifact of older shipping times when small packages were rare. It makes sense to encourage a country to send small packages at a shipping rate they can afford. The economics of the situation should have led to periodic reclassification of countries when their local economy changes.

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