USPS Exploring International Markets Greater NY PCC Greater

USPS Exploring International Markets Greater NY PCC & Greater NY Co. C April 18, 2018

Agenda • Exploring the Global Retail Market • Global Package Market Evolution • Customs • USPS International Products • Resources • Appendix (Customs Forms)

Exploring the Global Retail Markets

Cross-Border Transaction Growth Cross-border sales are growing substantially, with North America, Western Europe, and Asia-Pacific markets expected to drive the majority of revenue and transaction volume over the next five years. Cross Border B 2 C Transaction Value 476 216 167 53 Notes: Cross Border B 2 C Transactions accounts for when consumers buy online from merchants located outside of country borders. Source: Accenture & Alibaba “Rise of Digital Consumer and Business Organizations” 45 26

Marketplace Top Cross Border e-Commerce Products From The U. S. Examples of Products CLOTHING & ACCESSORIES BOOKS, DVDs, CDs COMPUTER HARDWARE & SOFTWARE TOYS & HOBBIES COSMETICS & BEAUTY PRODUCTS FLOWERS & GIFTS FOOD (GROCERIES & DELICACIES) CELLPHONES & ACCESSORIES SPORTING GOODS AUTOMOBILE PARTS

Global Marketplace e. Commerce is becoming more mobile. The growth of mobile commerce outpaces overall ecommerce sales growth SOURCE: IBM ONLINE COMMERCE INDEX

USPS Leads the Global Marketplace • USPS has the largest partnership network worldwide - giving your customers choices • Nearly 1 billion pieces delivered annually by our Postal partners around the world • We have the widest range of services available to US shippers • Largest member of the Universal Postal Union (UPU) which governs Postal operations • Alliance Partners that enhance global delivery and scanning performance • Flexible Pricing Options

USPS Alliance Partners Universal Postal Union (UPU) - - United Nations organization Sets Global operational guidelines and standards 192 member countries Operates EMS Co. Op (Express) of 174 countries for enhanced service. Hong Kong International Post Corporation (IPC) 24 Postal Operators from Europe, North America, Asia/Pacific -Management of PRIME -Cooperates with KPG -INTERCONNECT Programme Kahala Posts Group (KPG) Australia, China, France, Great Britain, Hong Kong, Japan, South Korea, Spain, Thailand, United States Expansion Posts: Canada, Vietnam Potential Candidate Posts: Brazil, India 8 CONFIDENTIAL – NOT FOR DISTRIBUTION Updated in: June 2016, as needed

Global Package Market Evolution

Global Package Market Size & Share Changes In U. S. Air Export Top 10 Destinations (2012 vs. 2016) FH CY-2012 Business Cross Border Destinations FH CY-2016 Business Cross Border Destinations 30% 24% 33% Source: The Colography Group, Inc. © 2017 CGI all rights reserved. Note: Colography estimates of carrier non-household shipments were distributed to destination country using a combination of data from the U. S. Air Export Hinged Supplemental Add-On Survey to The Colography Group’s National Survey Of U. S. Expedited Cargo and various secondary sources (including the U. S. Postal Service billing determinant data). Note: Includes GXG, PMEI, PMI and FCPIS. The report follows USPS guidance by considering Puerto Rico as a domestic destination. Note: Hong Kong and the Netherlands replaced Brazil and Singapore in the FH CY-2012 top 10 total countries.

Customs

Postal Clearance vs. Commercial • Postal Clearance is considered Duty Delivery Unpaid (DDU) • Commercial Clearance is considered Duty Delivery Paid (DDP – landed cost) • USPS and the world’s postal administrations enter customs through a strictly separate “postal” channel. Postal Channel has been largely a manual process, until recent years • Commercial clearance is used by all other entities entering packages into a country. The commercial process uses electronic data and electronic manifests that are auto rated for duty and tax.

Harmonized Tariff System • The Harmonized Commodity Description and Coding System (HS) is an internationally standardized system of names and numbers for classifying traded products • A tax rate is assigned to each Harmonized Tariff Code (HTC); these rates make up the Tariff Schedule • The HTC is what the US Census Bureau uses to track trade statistics between countries • U. S. Census Bureau Regulation

Harmonized Tariff System • Harmonized Codes, although extremely helpful to the Customs agent in the destination country, are not mandatory on Customs documents. • Verbal descriptions can be used as long as they explain: • What the commodity is (i. e. Short Sleeve Shirt) • What its used for (Men’s Golf Shirt) • What its made of (Polyester 60% - Cotton 40% Blend) • You must also use the retail value at which it was sold for to the buyer. Not the cost to produce or replace the item.

USPS International Products

Misconceptions • We do not track • We are slower • We are more expensive • Our service is not recognized as a leader • Easier with competitors • We do not have pickups

USPS Global Shipping Solutions USPS products have diversified solutions to fit the needs of your business.

Marketplace Service Offerings

Priority Mail Express International™ Offers expedited 3– 5 business day delivery 1 to over 180 countries. You save on international shipping with: • Tracking with multiple scan points. • Date-specified money-back guarantee to select locations. 1 • Free insurance on merchandise valued up to $200 and documents valued up to $100. 1 • Flat Rate options. • Free return of undeliverable packages. • Discount options with Commercial Plus® pricing 1. Exclusions apply. Please see usps. com ® or a Sales Representative.

Priority Mail International™ Offers 6– 10 business day priority delivery to global destinations. You save on international shipping with: • Flat Rate options for Large and Medium Flat Rate boxes. • Online customs registration. • Discount options with Commercial Plus® pricing. 1. For many major markets. Average number of days may vary based upon origin and destination.

First-Class Package International Service® (FCPIS®) For lower-value, lightweight items - ideal for cross-border e-commerce • Send up to 4 pounds and up to $400 in value • Electronic USPS Delivery Confirmation™ International (E-USPS DELCON INTL™) service and USPS Tracking® available to select destinations 1 • Commercial e. Packet® service available to select destinations through Postal Qualified Wholesalers 2 • LZ USPS® First Class Pkg Intl with E-Del. Con Service Delivery time varies by destination 1 Scanning performed by foreign postal operators once received in country. Available now when shipping to Australia, Belgium, Canada, Croatia, Estonia, Finland, Germany, Great Britain and Northern Ireland, Hungary, Israel, Latvia, Lithuania, Malaysia, Malta, Netherlands, New Zealand, Singapore, Spain, and Switzerland. For complete details, see the IMM® 252. 2, available at pe. usps. com/text/immc 2_022. htm 2 Available now through Postal Qualified Wholesalers when shipping to Australia, Belgium, Canada, Croatia, Denmark, Estonia, Finland, France, Germany, Gibraltar, Great Britain, Hungary, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Netherlands, New Zealand, Portugal, Singapore, Spain, Sweden, and Switzerland.

Trackable First-Class Countries Australia Belgium Brazil Canada Croatia Denmark Estonia Finland France Germany Gibraltar Spain Switzerland Great Britain and Northern Ireland Hong Kong Hungary Israel Italy Japan Latvia Lithuania Luxembourg Malaysia Malta Netherlands New Zealand Portugal Singapore South Korea

International Priority Airmail® (IPA®) and International Surface Air Lift® (ISAL®) Great for international volume mailings of low-value, lightweight items weighing up to 4. 4 pounds and Air Mail® M-Bag® sacks. E-commerce; catalogs and publications; direct marketing; business and financial mail Free returns for undeliverable mail Use of U. S. return address and USPS markings on items Direct routing from U. S. to destination country by air 1 1 Mailings to Canada and Mexico may be dispatched via ground transportation.

Universal Postal Union (UPU) Integrated Product Plan Overview • Adopted at 2016 UPU Congress • Implementation January 2018 • Fundamental change from physical characteristics of the mail (shape) to also focus on content (documents vs. goods) Impact on USPS Customers • Items containing goods may not be mailed as FCMI • Items containing goods, regardless of shape (i. e. letter-size, flat-size) may be mailed as FCPIS, IPA/ISAL Packets or Commercial e. Packet (CEP)

International Service Center Locations Maine Washington SFO- Montana Far East SE Asia W. Canada North Dakota Minnesota New York Oregon Wisconsin Idaho South Dakota Nebraska Nevada Utah Colorado California Far East SE Asia W. Canada L. America Kansas Oklahoma Arizona New Mexico USPS International Service Center. ISC Michegan Pennsylvania Iowa Wyoming LAX- Vermont Michegan (upper penisula) ORDMissouri Massachutes Rhode Islad Connecticut JFK- New Jersey Delaware Maryland Ohio APO/FPO Illinois Indiana Canada Europe Arkansas Kentucky Middle East Africa Tennessee L. America Far East SE Asia Mississippi New Hampshire West Virginia North Carolina Canada Europe Middle East Africa L. America Far East SE Asia South Carolina Georgia Alabama Texas Louisiana Florida MIAL. America

Important Factors For Cross-Border ECommerce Shopping Source: 2017 IPC Cross-Border E-Commerce Shopper Survey

Global Direct Entry (GDE) • Merchandise is labeled and packaged overseas before being sent to the U. S. • Shipments must be cleared by U. S. Customs and Border Protection. • Certain approved wholesalers put shipments into U. S. mail stream. How it works • The item is shipped to the U. S border/port. • The item clears customs. • The item enters the USPS mail stream. • USPS® delivers the item via the specified service

USPS Global e. Commerce Marketplace (GEM) Driving Cross Border Through Trust • Customer Facing Technology • Shop and Pay in Local Currency • Checkout in Local Language • Pay with local/preferred Payment Options • Prepay Guaranteed Fully Landed Costs – DDU and DDP options available • Merchant Facing Technology • Easy, hassle-free integration • Multi-Lingual Customer Support • Receive Payments in U. S. Dollars • Risk Free – Ge. M Takes on Risk of Fraud and Chargebacks • 190 destinations using postal and commercial carriers

Ge. M Merchant How does it work? Ge. M plugs into a merchant’s existing website to offer international customers an experience with local currency, payment, and shipping features (total landed cost) DDU/DDP shipping options in 2 speeds. For the merchant the solution is risk- and fraud-free. After the sale, merchant ships the int’l orders to a domestic location, Ge. M takes care of the rest. • Enabling Conversion International buyers check-out in their language and currency using their preferred payment method • Shipping Made Easy Merchants send the order to one of our processing centers in Miami, FL or Los Angeles, CA - just like any other domestic order • We deliver risk and hassle free Once prepared all orders are delivered through our best value global postal and commercial network, risk and hassle free for both merchant and consumer.

USPS e. Global Logistics (e. GL) Low cost option to China • Ideal for volume shippers • Delivery by Alternative Logistics Provider (ALP) • Complete end-to-end tracking • Customs and duties electronic facilitation • $100 Insurance included* • Delivery to buyer’s address • Delivery in China in 4 to 8 days** *Provided by the ADP **To most locations, not guaranteed, excludes major holidays

e. GL Operational Process USPS e. GL is a new initiative. The Shipper is responsible for preparing shipments, receiving verification at a USPS BME or DMU, and delivering shipments to the ALP’s facility. Once tendered, the ALP is responsible for all aspects of international export preparation, transportation, Customs clearance and delivery. Step 2: Commercial Preparation, Export, and Air Transportation ? Shipper transports packages from BME to the ALP facility* ALP confirms item weight and checks items for compliance ALP generates all commercial export documentation ALP provides international air transportation Step 3: Duties and Taxes Payment, Commercial Customs Clearance, and Final Delivery ALP collects duties and taxes from Buyer electronically Items are cleared through the commercial Customs clearance * This step is unnecessary if verification is with a DMU at the ADP facility. Depending on volume, the first Customer in each market may start with a BME Facility verification stop. ALP routes shipments for local dispatch Delivery at home of Buyer

USPS e. GL Locations* Chicago (ORD) Cincinnati (CVG) NY and NJ (JFK & EWR) San Francisco (SFO) Los Angeles (2 locations) *USPS e. GL Tender Locations.

Global Shipping Solutions (GSS) Designed to streamline the shipping process by supporting data capture, postage calculation, label generation, and data transfer for packages being shipped through the USPS. • Accepts package information electronically to reduce or eliminate the need for user data entry • Automates the generation of mailing labels and customs forms • Calculates postage using online discounts or customized rates • Supports receptacle processing, piece-to-sack mapping, and label generation • Produces required postage statements and manifests • Passes receptacle and package data to other USPS systems, for package tracking, postage payment, and export compliance

Helping Customers Grow • Our goal is to help customers grow their business by expanding beyond U. S. borders • We have implemented world class mailing solutions Reliable track and trace • Service performance • • Provide enhanced Global Network • Grow your share of the e-Commerce Market

Full-service shipping worldwide With shipping to over 180 countries across the world, USPS® can help you: No fuel surcharge No delivery area surcharge No extended delivery area surcharge No residential surcharge No dimensional weight charge Comprehensive delivery network

Resources • USPS International Welcome Page https: //www. usps. com/international/welcome. htm • Customs Forms & Requirements https: //www. usps. com/international/customs-forms. htm • International Mail Manual (IMM) http: //pe. usps. gov/text/imm/welcome. htm http: //pe. usps. com/ • USPS Service Pricing http: //pe. usps. com/text/dmm 300/Notice 123. htm#wp 1116072 • Export Regulations, Harmonized Tariff Codes http: //www. export. gov • Globalbusiness-sales@usps. com

Thank you

Appendix

Printing Customs Forms System Key features ü ü ü For more information PC Postage Vendors Click-N-Ship for Business Free Use from any desktop computer ü ü Address book ü (unlimited names) Customs form with round-date provided Pay with Credit Card usps. com Global Shipping Software (GSS) Easy installation ü Rate comparison between USPS and competitors Web-enabled tool for large USPS volume shippers ü Postage manifesting Typically offers a 30 -day free trial and ü savings analysis Prints Customs and shipping labels ü Duty and Tax estimation ü Tracking ü ü HTS Assistance usps. com Tracking Local International Sales Executive

Printing Customs Forms PS Form 6182, Commercial Invoice Use only with GXG PS Form 6182 is used Only for GXG letters and packages Refer to Global Express Guaranteed Service Guide, Publication 141 for more information

Printing Customs Forms PS 2976 / CN 22 Form PS 2976 for FCMI or FCPIS: • Have a maximum value of $400 • Weigh more than 16 ounces, or are parcel shaped • Contain goods • Also may be used on certain PMEI items, MBags, ISAL and IPA parcels, and the PMI Small Flat Rate Box and Flat Rate Envelope.

Printing Customs Forms PS 2976 -A / CP 72 Form PS 2976 -A for: • Items valued over $400 • All PMI parcels, regardless of weight or contents

Printing Customs Forms PS 2976 -B / CP 72