1. THE UPU REMUNERATION SYSTEMS
TOWARDS AN INTEGRATION
Andrés Argente
Co-chair UPU POC C2 Remuneration Integration Group
MADRID, JUNE 2017

2. Summary REMUNERATION. DEFINITION CURRENT UPU REMUNERATION SYSTEMS
OVERVIEW ON TERMINAL DUES
EVOLUTION OF TERMINAL DUES FROM ISTANBUL 2016
MANDATE FOR REMUNERATION INTEGRATION
PRINCIPLES OF REMUNERATION
STEPS FORWARD

3. REMUNERATION A DEFINITION
A PAYMENT THAT THE DESTINATION DESIGNATED POSTAL OPERATOR (DO) IS ENTITLED TO COLLECT FROM THE DISPATCHING DO FOR THE COSTS INCURRED TO HANDLE THE MAIL FROM THE ORIGIN DO IN THE DESTINATION COUNTRY
THE POSTAL PIPELINE
Admission at origin
Destination office of exchange
Handling (trying,etc)
Conveyance
Delivery

4. CURRENT UPU REMUNERATION SYSTEMS
Letter Post Items Parcels ECOMPRO EMS
Basic Services
acceptance, handling, conveyance and delivery
Value-added services
Liability, signature, etc.
Tracking data
Exchange of electronic tracking data, transmission targets
Quality of service
quality delivery time performance
BASIC RATE
INWARD LAND RATES (BASIC) (SELF
DECLARED
2004 –
CAP 2005)
SELF DECLARED RATES
SELF DECLARED RATES
Surcharges registered insured
Supplementary Remuneration Program
Bonus
Not available
Performance
incentives/ penalization
EMS pay-per-performance
Not available
Not available

5. UPU REMUNERATION SYSTEMS (Cycle 2018-2021)
LETTER POST (TERMINAL DUES - TD)
Items from 0 to 2 Kg
Domestic rates based as proxy to costs (TARGET COUNTRIES)
Country specific Item/kg rate (TARGET COUNTRIES) – FLAT Kg rate (TRANSITION COUNTRIES)
Maximum and minimum rates (caps & floors)
Quality of service linked (TARGET COUNTRIES- TRANSITION FROM 2020)
PARCELS (INWARD LAND RATES – ILR)
Items from 0 to 30 Kg
Self-declared rates from From 2005 yearly increase limited to the country’ rate of inflation (max. 5 %)
ECOMPRO (SPECIFIC PRODUCT FOR E-COMMERCE)
Sub-product of Parcels (0-30 Kg)
Self-declared rates without limitation from 2018
EXPRESS MAIL SERVICE (EMS)
Express mail service for messages and merchandise from 0 to 30 Kg
Self-declared rates

6. OVERVIEW - TERMINAL DUES
UNIVERSAL SYSTEM
- APPROVED BY CONGRESS. 231 COUNTRIES AND TERRITORIES
4 GROUPS OF COUNTRIES/TERRITORIES CLASSIFIED BY DEVELOPMENT POSTAL INDICATOR (DPI)
TARGET SYSTEM COUNTRIES (Country specific rates)
Group I: 42 countries/territories
Group II: 38 countries/territories
Group III: 39 countries/territories
TRANSITION COUNTRIES: 112 countries/territories (receiving contributions from Quality of Service Fund – QSF)
DPI: Calculated by the UPU IB. Statistical procedure country by country including macroeconomics, Gross National Income per capita and postal specific part with normal letter unit cost.
QSF: Percentage over TD allocated to each transition country for financing projects to improve the domestic quality of service. Istanbul Congress has adopted also an allocation to a common fund.

7. EVOLUTION OF TERMINAL DUES ISTANBUL CYCLE MAIN CHANGES
DIFFERENT RATES FOR “P/G” AND “E” FORMATS
REMUNERATION ADJUSTED TO THE FEATURES/COSTS OF THE “E” ITEMS
SEPARATION OF ITEMS BY CONTENTS: DOCUMENTS AND GOODS (APLICATION OF IPP PHASE I)
FOR REMUNERATION PRUPOSES, ALL ITEMS CONTAINIG GOODS, REGARDLESS THEIR FORMAT WILL BE CONSIDERED AS E FORMAT ITEMS.
STRONG INCREASE OF RATES FOR REGISTERED ITEMS
REGISTERED USED AS CHEAPER WAY FOR E-COMMERCE
INCLUDES SIGNATURE OF THE ADRESSE (PROOF OF DELIVERY) PLUS LIABILITY
NO COST COVERING
FROM 0,67 SDR in 2017 TO 1,1 SDR IN 2018 ( PLUS AROUND 10% YEARLY INCREASE UP TO 2021)

8. EVOLUTION OF TERMINAL DUES RATES
P,G, E FORMATS Ww
price
price
E FORMAT
375 g
175 g
P, G FORMATS
175 g
20 g
20 g
0 g
0 g
2000g
2000 g
weight
weight
CYCLE
CYCLE

9. MANDATE 2016 ISTANBUL UPU CONGRESS
STAGE I-2018 MID TERM CONGRESS
INTEGRATED REMUNERATION PLAN (IRP)
PROPOSE A MODERN, FORWARD-LOOKING PLAN FOR LETTERS, PARCELS AND EMS, SUPPORTING THE INTEGRATED PRODUCT PLAN AND TAKING ACCOUNT OF THEIR CONTENTS (documents and goods)
STAGE II-2020 CONGRESS
INTEGRATED REMUNERATION SYSTEM (IRS)
PROPOSAL OF AN INTEGRATED REMUNERATION SYSTEM BASED ON THE INTEGRATED REMUNERATION PLAN APPROVED BY THE 2018 CONGRESS

10. PRINCIPLES OF REMUNERATION (Summary – 2016 Istanbul Congress)
Ensure affordable and viable universal postal service through sustainable remuneration to delivery DOs
Support efficient and economically viable international postal services in line with market conditions, customer interests and regulatory requirements
Support global postal network under least market-distortive terms by
Being transparent, straightforward and mindful of the different resource and implementation constraints among UPU members while incentivizing improved service performance.
No discriminatory access to destination markets through country-specific, cost-based remuneration rates, while respecting:
Right for affordable access to international postal services for the least developed member countries
Prevention of r ing
Need for higher remuneration where domestic rates are set below cost owing to social or similar policies.

11. INTEGRATION – STEPS FORWARD
ISTANBUL BUSSINES PLAN (IBP) APPROVED BY 2016 UPU CONGRESS
WORK PLAN FOR INTEGRATION OF REMUNERATION ENDORSED BY UPU CA AND POC
INTEGRATION PRODUCT PLAN PHASE I:
Adapted remuneration to IPP to be implemented by 1st January 2018
IRP and INTEGRATION PRODUCT PLAN PHASE II (under progress):
Examination of possible options of remuneration integration supporting IPP
Comparative study on remuneration systems for similar weight items
Identification of operational costs
Examination main aspects of the system: formats, tariffs, etc.
Differentiation on basic product features, value added services and QS
Studies on relationship between domestic tariffs and costs of processing inward international postal items
Identification of operational costs versus product value anomalies
………
MORE THAN 40 ACTIONS PROVIDED TO COMPLY WITH THE MANDATE OF THE 2016 CONGRESS ON REMUNERATION INTEGRATION

12. UPU 2018 CONGRESS POC/CA FEBRUARY 2018
Preliminary presentation for endorsement of the Integration Remuneration Plan supporting the Integration Product Plan
Based on mentioned studies and discussions between the UPU member countries, whilst
Respecting the previously mentioned principles
ADDIS ABABA 2018 UPU CONGRESS
Presentation to the Congress of a POC/CA final proposal on the Integration Remuneration Plan
The related decision of the Congress will be further developed through the Universal Convention and Regulations to prepare and discuss the Integration Remuneration System

13. CHALLENGES OF AN UNIVERSAL SYSTEM
REACH AN INTEGRATED REMUNERATION SYSTEM FOR DIFFERENT PRODUCTS WITH DIFFERENT FEATURES AND DIFFERENT VALUE ADDED SERVICES
REACH A BALANCE BETWEEN
Industrialized/developing countries (target/transition)
Geographic characteristics
Exporting/importing DOs
Diverse levels of postal development
Costs coverage/affordability/accurate remuneration rates
Different domestic customer needs, so:
Different domestic markets/rates
Different domestic services
Scope of reserved services/dissimilar regulation …

14. REMUNERATION
JUNE – DECEMBER 2016
JANUARY 2017

15. THANKS FOR YOUR ATTENTION