UPU postal-rail project: establishing an international postal rail transport service

20 March 2018
By Bilal Ahmad Khan, Customs And Transport Programme Manager, Universal Postal Union International Bureau

Although the carriage of freight by rail can provide a cheaper and faster alternative to sea and air transport, it is still very low. In order to develop the transport of postal items by rail, the Universal Postal Union (UPU) has set up a task force and undertaken several pilots in order to better understand how the performance of rail transport between China and Europe can be improved and how its use by shippers can be enhanced.

China is the most important country of origin for the import of goods into the European Union (EU) and is now developing into one of its most rapidly growing export markets. Some 90% of freight shipments between China and Europe today are transported by sea, with each shipment taking approximately 40 days to complete the journey. Around 9% of the shipments are transported by airfreight and are delivered within a day. Although it could potentially offer great benefits, the share of rail freight is just under 1% in terms of total volume and transport takes about 15 days.

The main factors taken into account by shippers when choosing between the different modes of transport available is reliability, frequency, flexibility, customer orientation, transport time and price. Given the growth in postal items being transported between China and Europe, due in particular to e-commerce transactions, and given the potential benefits which the carriage of postal items by rail offers, the UPU has set up a task force to better understand how the performance of rail transport between China and Europe can be improved and how its use by shippers can be enhanced.

Task force

The mandate of the UPU is more precisely defined in the Istanbul World Postal Strategy, the Union’s strategic plan for the period 2017-2020: to develop detailed procedures for exchanging international mail by rail. This involves working with relevant international rail organizations, and with the WCO to jointly study and develop appropriate regulations related to the rail transportation of mail items, while jointly organizing seminars or workshops with these organizations and the WCO with a view to developing and disseminating best practices. Among the relevant rail organizations are:

  • the International Rail Transport Committee (CIT), an association of some 216 railway undertakings and shipping companies which provide international passenger and/or freight services;
  • the Coordinating Council on TransSiberian Transportation (CCTT), an association whose main objective is to promote the use of the TransSiberian route;
  • the Intergovernmental Organisation for International Carriage by Rail (OT I F) that developed the Convention concerning International Carriage by Rail (COTIF), which includes the Uniform Rules concerning the Contract of International Carriage of Goods by Rail (CIM) and whose membership is mainly made up of European countries;
  • the Organization for Cooperation of Railways (OSJD) that conceived the Agreement on International Railway Goods Transport (SMGS) and the Agreement on International Passenger Transport (SMPS) gathering countries from Eastern Europe;

Work on the “postal-rail project” started in July 2015. Initially, a project team was constituted to study the issues involved. In March 2017, a task force for the transportation of postal items by rail was set up. It consisted of the following members:

  • Postal operators of the UPU Postal Operations Council (POC), which is the technical and operational mind of the UPU – China, France, Germany, Poland and the Russian Federation;
  • Postal operators having observer status at the POC – Belarus and Kazakhstan;
  • National Customs administrations – China, Germany and Poland;
  • External stakeholders – the WCO, the EU and the above mentioned rail organizations.

The task force’s role is to examine ways to harmonize and simplify postal, Customs and rail regulations, standards and formalities. This includes looking at ways to increase the exchange of electronic advance data and to enhance security and safety measures through effective risk management.

Work done to date

To date, the task force has organized 35 pilots for the transportation of postal items by rail that have been carried out along different routes from China to Europe under two Customs regimes: the Eurasian Customs Union and the EU’s Union Customs Code.

The majority of the pilots were conducted on container trains, but some were also conducted on passenger trains. In addition, some of the pilots featured multimodal transportation (e.g. rail, air, sea and truck). China was the origin country of the goods being transported for the majority of the pilots. In the near future, China Post, in consultation with China Customs, will be organizing return pilots from Western European countries to China.

During the pilots, UPU electronic data interchange (EDI) messages were exchanged between designated operators (referred to also as postal operators) in order to keep track of the mail, and China Customs applied electronic seals to the container trains transporting international mail from China to destination countries. The possibility of exchanging UPU EDI messages with Customs is still being explored.

For postal operator purposes, mail transported by surface (i.e. by ship, road or rail) was handed over electronically to the transport company using the required UPU CN 37 delivery bill for surface mail and the CN 34 receptacle label, when letter mail was involved. Parcels require the use of the CP 83 receptacle label for surface mail. The delivery bill and receptacle labels are very important as they define a shipment as being mail, rather than cargo or freight.

Moreover, for Customs purposes, the two common consignment notes for international rail transport, designed under the COTIF Uniform Rules concerning the Contract of International Carriage of Goods by Rail (CIM) and the OSJD Agreement on International Railway Goods Transport (SMGS), were used. The exchange of these documents is still paper based.

For pilots conducted on passenger trains, a rail document entitled “Luggage ticket for passenger train/international passenger transport shipment” was used.

Way forward

The task force is currently working on possible solutions to transit issues encountered during the pilots. There were cases when the postal operator of an EU country did not present the CN 37 delivery bill to the Customs administration, which resulted in the shipment being treated as general cargo. The T1 external transit procedure was subsequently applied.

Moreover, in the EU, where non-Union goods are carried by post (including parcel post) from one point to another in the Customs territory of the Union, the packaging and any accompanying documents must bear a yellow label. The postal operator in the transit country affixing these stickers remains liable for the goods up until they reach another office of exchange or the office of destination. The issue of whether the postal operator of origin should be required to pay the postal operator of transit for affixing these stickers is still being examined.

Task force members are also preparing guidelines for establishing a postal rail transport service, spelling out all procedures from origin to destination, including transit. The guidelines will be non-mandatory in nature and could serve as a model for designated operators and rail companies in other parts of the world.

The postal rail project will help to develop universal processes for rail. Designated operators will be able to use multimodal transport – rail, truck or air – to expedite the conveyance of international mail. In addition, the cost of operational procedures will be kept to a minimum to ensure viability.

Potential benefits

The transportation of postal items by rail carries many potential benefits. Sending postal items by rail could be economical. Postal operators would have at their disposal a cheaper transport mode, and will be able to send and return merchandise more economically (by rail rather than by air). Reduced transport costs will also benefit companies, especially micro, small and mediumsized enterprises (MSMEs). For example, one of China Post’s big customers would like to deliver its product “end-to-end” within 25 to 28 days, which will be possible by rail if the rail transportation process becomes smooth and stable.

Moreover, rail transport has the potential to be faster and more reliable than other means of transport (e.g. sea transport). It offers the possibility to transport large volumes of postal items which are difficult to transport by air, as well as items which are forbidden from being transported by air for security and safety reasons, such as items containing lead-zinc batteries. In terms of security, radio-frequency identification (RFID) solutions will be applied to items, enabling tracking and tracing from endto-end, for the benefit of all stakeholders.

In addition, sending postal items by rail is also sustainable for the environment and this aspect is very much at the heart of the UPU, and has been laid out in the Istanbul World Postal Strategy which was adopted in 2016. Transporting mail by rail produces less fuel and carbon emissions than by air, even when postal operators combine air and surface transport (Surface Air Lifted services: a combination of air and surface transport, where mail is transported by air from the country of origin to the country of destination, but is transported by surface within the country of origin up to the office of exchange and in the country of destination from the office of exchange to the point of delivery).

As such the UPU postal-rail project supports the adoption of the 2030 Agenda for Sustainable Development by the Heads of State and Government and High Representatives meeting at the United Nations’ Headquarters in New York in September 2015 to decide on new global “sustainable development goals.”

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