INTERCONNECT looking into direct entry and ETOE mail flows

INTERCONNECT was set up as a network to improve performance for cross-border e-commerce delivery between member posts and set a global standard which suits the needs of the shippers and the e-buyers. To do this, IPC developed a whole range of innovative solutions and set up a shared standard. Currently, most of these solutions are already in place and available for members to use and the INTERCONNECT standard has been approved by members.

While IPC continues to work on the successful roll-out and implementation of these solutions, it is also looking at areas for improvements and new developments which have popped up in recent years. Two such developments are the huge growth in e-commerce flows coming from Asia and the increased importance of Direct Entry flows.

Asian ETOE flows capturing large volumes of low-cost e-commerce items

According to the 2016 IPC cross-border e-commerce shopper survey, China is the world’s biggest e-commerce source market, accounting for a quarter of recent cross-border purchases in the countries surveyed. China is one of the top three origin countries for every surveyed country1 and it is often number one on the list.

These e-commerce flows from China or Asia in general are not part of the INTERCONNECT network, as the Asian origin posts are not yet members of INTERCONNECT. There is, however, an opportunity to incorporate a significant part of Asian e-commerce flows in the network through Extraterritorial Offices of Exchange (ETOEs).

Several INTERCONNECT members have ETOEs located in Asia – for instance in hubs like Singapore. These ETOEs are used by Asian e-retailers such as AliExpress as one of the channels to deliver the massive amount of low-cost e-commerce packets headed out of East Asia.

ETOEs in Asia are currently not covered by the INTERCONNECT framework, but since they are part of the networks of member posts and often use compatible data sets for part of the delivery journey, IPC is currently investigating whether ETOE traffic could benefit from the end-to-end solutions and services offered under the INTERCONNECT umbrella. 

Direct Entry becoming more used

One of the recent developments in cross-border mail flows is the increased use of Direct Entry. Rather than shipping mail from one country to another via Offices of Exchange (OEs), posts are increasingly looking into ways to directly inject these cross-border postal e-commerce items into the destination posts’ domestic network, therefore skipping locations in the supply chain where items are often manually processed. This increases efficiency and lowers processing costs.

Accomplishing such solutions, however, requires alignment of systems and the provision of correct data so the directly injected mail items can be automatically sorted by the domestic sorting machines.

As Direct Entry traffic is growing, IPC is looking into including these flows into the INTERCONNECT framework, which does not cover them at the moment. It will, as a start, actively work with members that already have Direct Entry solutions in place – provided that items in these flows are meeting the INTERCONNECT requirements regarding end-to-end tracking, reliability and data quality and timeliness – with the aim to include volumes in the network by the end of 2017. New and alternative Direct Entry solutions are expected to follow suit.

 

1 26 different receiving countries were surveyed: Austria, Australia, Belgium, Canada, China, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, the United Kingdom and the United States.