Statistics and Accounting Guide

Similar documents
Annex 1 to letter 0426(DPRM.REM)1035 of 16 April I. Articles 28 and 29 of the UPU Convention. Article 28 Terminal dues. General provisions

Grow Transfer Incentive Scheme ( GTIS ) ( the Scheme )

ARMATS ARMENIAN AIR TRAFFIC SERVICES AERONAUTICAL INFORMATION SERVICES REPUBLIC OF ARMENIA GENERAL DEPARTMENT OF CIVIL AVIATION

REGULATION On application of Discount coefficients to the Airport charges to be collected at Boryspil International Airport

ARMATS ARMENIAN AIR TRAFFIC SERVICES AERONAUTICAL INFORMATION SERVICES REPUBLIC OF ARMENIA GENERAL DEPARTMENT OF CIVIL AVIATION

Grow Transfer Incentive Scheme

SECTION TWENTY-THREE * INCENTIVES GENERAL RULES AND REGULATIONS DEFINITIONS INTERMODAL CONTAINER DISCOUNT PROGRAM

Terms and Conditions of the Carrier

TRAFFIC COMMERCIAL AIR CARRIERS

Act on Aviation Emissions Trading (34/2010; amendments up to 37/2015 included)

INFORMATION CIRCULAR ROUTE CHARGES IN MOROCCO

AGREEMENT. The Department of Civil Aviation of Bosnia and Herzegovina represented by its Directors General, hereinafter referred to as DCA,

NOTICE 1063 OF 2012 AIRPORTS COMPANY SOUTH AFRICA LIMITED. AIRPORTS COMPANY ACT, 1993 (ACT No. 44 OF 1993), AS AMENDED PUBLICATION OF AIRPORT CHARGES

SKELLEFTEÅ AIRPORT PRICE LIST TABLE OF CONTENTS

TARIFF OF HARBOUR DUES

CHARGES REGULATIONS APPLYING TO COPENHAGEN AIRPORT IN FORCE DURING THE PERIOD 1 APRIL 2018 TO 31 MARCH 2019

AGREEMENT BETWEEN JAPAN AND THE KINGDOM OF SAUDI ARABIA FOR AIR SERVICES

INFORMATION CIRCULAR TERMINAL CHARGES IN MALTA

INCENTIVE PROGRAM

INFORMATION CIRCULAR TERMINAL CHARGES IN IRELAND

Incentive Discounts Programme for Traffic Development at Sofia Airport 2018

Guyana Civil Aviation Authority. ATR Form M Instructions

INFORMATION CIRCULAR AIR NAVIGATION CHARGES IN BELARUS

INFORMATION CIRCULAR TERMINAL CHARGES IN THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

INFORMATION CIRCULAR TERMINAL CHARGES IN BULGARIA

Frequently Asked Questions. Free allocation from the Special Reserve (Art 3f ETS Directive 1 )

2017 AERONAUTICAL FEES

Route Support Cork Airport Route Support Scheme ( RSS ) Short-Haul Operations Valid from 1st January Introduction

INFORMATION CIRCULAR TERMINAL CHARGES IN HUNGARY

INFORMATION CIRCULAR TERMINAL CHARGES IN GREECE

2 NO GOVENMENT GAZETTE, 30 DECEMBE 2009 IMPOTANT NOTICE The Government Printing Works will not be held responsible for faxed documents not recei

WAYNE COUNTY AIRPORT AUTHORITY AIR SERVICE INCENTIVE PROGRAM DETROIT METROPOLITAN WAYNE COUNTY AIRPORT

AIR SERVICE INCENTIVE PROGRAM

TREATY SERIES 2007 Nº 73

VANCOUVER AIRPORT AUTHORITY TARIFF OF FEES AND CHARGES Effective January 1, 2019 Subject to Change PAYMENT TERMS AND CONDITIONS

INFORMATION CIRCULAR TERMINAL CHARGES IN MOLDOVA

ENTRY, DEPARTURE AND TRANSIT OF AIRCRAFT 1. GENERAL 2. INTERNATIONAL SCHEDULED FLIGHTS GEN SEP 2012 AIP HUNGARY

REGULATIONS FOR DECLARATION AND DISPOSAL OF UNCLAIMED ITEMS OF THE PIRAEUS CONTAINER TERMINAL S.A. IN THE PIRAEUS FREE ZONE

Tariff Regulations at Torp Sandefjord Airport

Tariff Regulations at Torp Sandefjord Airport

WAYNE COUNTY AIRPORT AUTHORITY AIR SERVICE INCENTIVE PROGRAM DETROIT METROPOLITAN WAYNE COUNTY AIRPORT AUGUST 2017

The explanations of other terms used throughout the tables are contained in the section on Definitions immediately following the tables.

MEMBERSHIP, ENTERING INTO AN AGREEMENT AND RESPONSIBILITIES OF THE COMPANY

INFORMATION CIRCULAR TERMINAL CHARGES IN DENMARK

HARBOUR DUES. The Port of Helsingborg

To be in effect from 1 September 2017 to 31 August 2019 CONTENTS

Short-Haul Operations Route Support Scheme (RSS)

Jönköping Airport Price List

Official Journal of the European Union L 7/3

Aircraft landing fees for the Paris - Orly and Paris - Charles-de-Gaulle airports:

GHANA CIVIL AVIATION (ECONOMIC)

INFORMATION CIRCULAR TERMINAL CHARGES IN THE NETHERLANDS

Important Note regarding Peak Season dates for 2014 point 1K in Appendix A - Group Booking Confirmation

REPUBLIC OF LATVIA. State Joint-stock Company Latvijas Gaisa Satiksme Aeronautical Information Service Riga Int. Airport, LV-1053, Latvia

1.2 Notwithstanding the provision in 1.1 this BL applies to the airport in Denmark with the most passenger movements.

General Authority of Civil Aviation (GACA) Customer Protection Rights Regulation

MARINE CIRCULAR MC-1/2013/1

Accommodation Survey: November 2009

INFORMATION CIRCULAR TERMINAL CHARGES IN CROATIA

SAMTRANS TITLE VI STANDARDS AND POLICIES

COMMISSION IMPLEMENTING REGULATION (EU)

ANA Traffic Growth Incentives Program Terms and Conditions

Conference on Search and Rescue

INFORMATION CIRCULAR TERMINAL CHARGES IN CROATIA

PPR REGULATIONS FOR BUSINESS AND GENERAL AVIATION AT EINDHOVEN AIRPORT

EXHIBIT E to Signatory Airline Agreement for Palm Beach International Airport RATE AND FEE SCHEDULE

(i) Adopted or adapted airworthiness and environmental standards;

Applicant: EUROWINGS LUFTVERKEHRS AG (Eurowings) Date Filed: July 16, 2014

DMA RO Circular no. 002

MU-avtalet. In English

HEATHROW NIGHT MOVEMENT AND QUOTA ALLOCATION PROCEDURES Version 3

RECOMMENDATION ECAC/16-1 AIR CARRIERS LIABILITY WITH RESPECT TO PASSENGERS

COVER SHEET. Reduced Vertical Separation Minimum (RVSM) Information Sheet Part 91 RVSM Letter of Authorization

Workers compensation benefits guide

INFORMATION CIRCULAR AIR NAVIGATION CHARGES COLLECTED BY EUROCONTROL ON BEHALF OF THE ARAB REPUBLIC OF EGYPT

PROPOSED REGULATION OF JCAR CONSUMER PROTECTION

ANA Traffic Growth Incentives Programme Terms and Conditions

AIR TRAFFIC AND NAVIGATION SERVICES COMPANY SOC LIMITED

TERMINAL TARIFF Extracts

TRAVEL GUIDELINE on the reimbursement of official trips of public servants and contract staff at TU Wien (status: 28 January 2011) (online

Notice for commencement of consultations on airport charges at Sofia Airport,

THE TARIFF OF PORT FEES AND CHARGES SZCZECIN AND ŚWINOUJŚCIE SEAPORTS AUTHORITY

Tariffs for Aerodrome Services. at the John Paul II International Airport Kraków-Balice. k r a k o w a i r p o r t. p l

1.2 Some of the figures included in this publication may be provisional and revised in later issues.

(i) When the passenger has booked a ticket in advance when the Carrier provides a confirmation of the booking.

United Global Performance Commitment 2017

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

INFORMATION CIRCULAR AIR NAVIGATION CHARGES IN THE ARAB REPUBLIC OF EGYPT

Valencia, 17 th December 2015

General Conditions of Carriage for Passengers and Baggage

Summary of the rights of passengers travelling by bus and coach 1

Notice for commencement of consultations on airport charges at Sofia Airport,

DETAILS AND PRINCIPLES REGARDING PROPOSED REVISED SERVICE CHARGES OCTOBER 1, 2000

COMMISSION REGULATION (EU) No 255/2010 of 25 March 2010 laying down common rules on air traffic flow management

Member status PATA Member Chapter Member Non-member

PART III ALTERNATIVE TRADING SYSTEM (SPA)

1.2. This working procedure regards IATA Season Summer 2019 (S19). This season starts at March 31, 2019 and ends at October 26, 2019.

B U S I N E S S T R A V E L H A N D B O O K

Schedule of Fees and Charges for Memmingen Airport (EDJA / FMM)

Programme initiative.pt 2.0 Regulations

Transcription:

Statistics and Accounting Guide January 2017 edition Contact: Mr Philippe Grondein (philippe.grondein@upu.int) Remuneration Programme Markets Development and Regulation Directorate UPU International Bureau This version of the guide includes changes to the UPU Convention decided upon by the 2012 Congress, as well as changes to the Letter Post Regulations decided upon by the Postal Operations Council up to February 2016.

3 Table of contents Page CHAPTER I TERMINAL DUES RATES AND TRANSIT CHARGES... 5 1 THE TERMINAL DUES SYSTEM... 5 1.1 Rates Target system... 5 1.2 Rates New target system... 7 1.3 Rates Transitional system... 7 1.4 Exchange of format-separated mails... 8 1.5 Accession to the target system... 9 1.6 Registered and insured items... 9 1.7 M bags... 9 1.8 Contributions to the Quality of Service Fund (QSF)... 9 1.9 Bulk mail... 10 1.10 Link to quality of service... 11 1.11 Direct access... 13 1.12 International business reply service (IBRS)... 13 1.13 Advice of delivery service (AR)... 14 2 TRANSIT: CONVEYANCE AND CHARGES... 14 2.1 Conveyance to the country of destination... 14 2.2 Transit of à découvert items and missent items... 15 2.3 Return of empty bags... 17 3 EXEMPTION FROM TERMINAL DUES... 19 CHAPTER II STATISTICAL OPERATIONS RELATED TO TERMINAL DUES... 20 1 INTRODUCTION... 20 1.1 The target country system... 20 1.2 The revision mechanism... 20 2 OVERVIEW OF THE STATISTICAL PROCESS... 22 2.1 General principles... 22 2.2 Sample selection for target system DOs (RL 229)... 22 2.3 Sample selection for the revision mechanism (RL 232)... 26 2.4 Data collection... 29 2.5 Estimation overview... 31 2.6 Notice of design decisions... 32 2.7 Statistical counts not performed... 32 CHAPTER III TERMINAL DUES SYSTEM OPERATIONS AND ACCOUNTING... 43 1 OPERATIONS CONCERNING REGISTRATION OF WEIGHT AND NUMBER OF ORDINARY MAIL AND REGISTERED AND INSURED ITEMS SUBJECT TO TERMINAL DUES... 43 1.1 Operations at the office of exchange of origin CN 31 letter bill... 43 1.2 Procedures for returning empty bags... 45 1.3 Operations at the office of exchange of destination... 45 1.4 Operations at the central service of the designated operator of destination... 46 2 OPERATIONS CONCERNING BULK MAIL... 47 2.1 Operations at the office of exchange of origin... 47 2.2 Operations at the office of exchange of destination... 47 2.3 Accounting for bulk mail... 48 3 ACCOUNTING FOR TERMINAL DUES... 48 3.1 CN 61 detailed account... 48 3.2 Time limit for submission of CN 61... 49 3.3 Time limit for acceptance of CN 61... 49 4 SETTLEMENT OF TERMINAL DUES ACCOUNTS... 49 4.1 CN 64 statement... 49 4.2 Time limit for acceptance of CN 64... 49 5 PROVISIONAL PAYMENTS OF TERMINAL DUES... 50 5.1 When and on what basis a provisional payment may be requested... 50 5.2 Exchange rate to be applied... 50 6 QUALITY OF SERVICE FUND ACCOUNTING... 50

4 6.1 Regular billing... 50 6.2 Time limit for payment... 51 CHAPTER IV TRANSIT OPERATIONS AND ACCOUNTING... 60 1 REGISTRATION OF THE WEIGHT OF MAIL SUBJECT TO CLOSED TRANSIT CHARGES AND OF EMPTY RECEPTACLES... 60 1.1 Operations at the office of exchange of origin... 60 1.2 Operations at the office of exchange of transit... 60 2 DETERMINATION OF THE WEIGHT OF EMPTY RECEPTACLES... 61 2.1 CN 69 "empty receptacles" statements... 61 3 DETERMINATION OF THE WEIGHT OF À DÉCOUVERT (OPEN TRANSIT) ITEMS... 61 3.1 Operations at the office of exchange of origin... 61 3.2 Operations at the office of exchange of open transit... 63 4 PREPARATION OF DETAILED ACCOUNTS FOR TRANSIT (CLOSED AND OPEN TRANSIT) AND EMPTY BAGS... 63 4.1 Accounting for closed transit mail surface... 63 4.2 Accounting for closed transit mail by air... 64 4.3 Accounting for empty receptacles... 64 4.4 Accounting for open transit mail... 64 4.5 Accounting for internal air conveyance... 65 4.6 Submission and acceptance of CN 51 accounts... 65 5 SETTLEMENT OF TRANSIT CHARGES ACCOUNTS... 65 5.1 Settlement... 65 5.2 Methods of payment... 65 5.3 Time limit for payment... 65 APPENDIX A STATISTICAL OPERATIONS RELATED TO TERMINAL DUES... 84 1 OVERVIEW OF UPU SYSTEM SAMPLING REQUIREMENTS... 84 1.1 Flat rate per kilogramme involving exchanges with transitional countries... 84 1.2 Target country system... 84 1.3 Revision mechanism... 84 2 FORMULAE FOR ESTIMATION OF ANNUAL IPK AND ANNUAL ITEMS... 85 2.1 Formula by mail category... 85 APPENDIX B INFORMATION ON AIRMAIL ACCOUNTING... 87 1 THE BASIC AIRMAIL CONVEYANCE RATE... 87 2 DEFINITION OF TONNE-KILOMETRE AND KG-KILOMETRE... 87 3 HOW WEIGHTS AND DISTANCES ARE MEASURED... 87 4 THE CN 38 DELIVERY BILL... 90 5 EMPTY BAG BILLING SCENARIOS... 93 6 INTERNAL AIR CONVEYANCE... 94 APPENDIX C OVERVIEW OF TERMINAL DUES TIMELINES... 98 APPENDIX D COUNTRY CLASSIFICATION... 99 Notes 1 References to RL relate to the Letter Post Regulations adopted by the 2013 POC. International Bureau of the Universal Postal Union Berne, September 2013

5 Chapter I Terminal dues rates and transit charges 1 The terminal dues system 1 Terminal dues were introduced by the 1969 Tokyo Congress as a means of compensating designated operators for the costs incurred in handling mail received (i.e. costs relating to operations such as sorting, conveyance to the delivery office, and delivery). 2 Between the single rate applicable to all mail adopted at the Tokyo Congress and the system adopted by the 2012 Congress, several improvements had been made by successive Congresses with the aim of making the system as fair as possible. 3 Major changes in the international postal environment have brought a certain complexity to the system because of the need to prevent it from being circumvented and exploited to the prejudice of designated operators. 4 As of 1 January 2014, when the Acts of the 25th Congress come into force, the principles of the terminal dues (TD) system (Convention articles 29 to 32) are as follows: a By virtue of Congress resolution C 77/2012, countries are classified in groups 1.1, 1.2, 2, 3, 4 and 5 (The list of countries in each group is included in Appendix D to this guide.): b c d group 1.1 comprises the countries in the target system prior to 2010; group 1.2 and 2 countries joined the target system as of 2010 and 2012; group 3 countries will join the target system in 2016; group 4 and 5 countries will apply the transitional TD system for the 2014 2017 period. The arrangements are transitional, moving toward a country-specific payment system. Any country in the transitional system may opt to be treated as a target country under the terminal dues provisions in the Convention and Letter Post Regulations (Convention article 29.13). Transition countries can volunteer to be treated as target countries (1.1, 1.2 or 2). Target countries from groups 1.2 and 2 can volunteer to be treated as group 1.1 countries. Target countries from group 2 can volunteer to be treated as group 1.2 countries. Access is opened to the rates, terms and conditions for the domestic services of each country in the target system, and on a non-discriminatory basis to countries in the transitional system. 1.1 Rates Target system 5 Countries in the target system prior to 2010 will pay each other country-specific rates based on 70% of the domestic tariffs for a 20-gramme priority small letter (P) and a 175-gramme priority large letter (G), subject to the following caps: 2014: 0.294 SDR per item and 2.294 SDR per kilogramme; 2015: 0.303 SDR per item and 2.363 SDR per kilogramme; 2016: 0.312 SDR per item and 2.434 SDR per kilogramme; 2017: 0.321 SDR per item and 2.507 SDR per kilogramme. 6 The rates may not be lower than: 2014: 0.203 SDR per item and 1.591 SDR per kilogramme; 2015: 0.209 SDR per item and 1.636 SDR per kilogramme; 2016: 0.215 SDR per item and 1.682 SDR per kilogramme; 2017: 0.221 SDR per item and 1.729 SDR per kilogramme.

6 7 Countries in the target system as from 2010 and 2012 will pay each other country-specific rates based on 70% of the domestic tariffs for a 20-gramme priority small letter (P) and a 175-gramme priority large letter (G), subject to the following caps: 2014: 0.209 SDR per item and 1.641 SDR per kilogramme; 2015: 0.222 SDR per item and 1.739 SDR per kilogramme; 2016: 0.235 SDR per item and 1.843 SDR per kilogramme; 2017: 0.249 SDR per item and 1.954 SDR per kilogramme. 8 The rates may not be lower than: 2014: 0.203 SDR per item and 1.591 SDR per kilogramme; 2015: 0.209 SDR per item and 1.636 SDR per kilogramme; 2016: 0.215 SDR per item and 1.682 SDR per kilogramme; 2017: 0.221 SDR per item and 1.729 SDR per kilogramme. 9 The rates applied for flows between countries in the target system in a given year shall not lead to an increase of more than 13% in the base terminal dues revenue before quality of service adjustment for a letter-post item of 81.8 grammes, compared with the previous year. 10 For flows under 75 tonnes per year between countries in the target system as from 2010 and between these countries and countries in the target system prior to 2010, the per kilogramme and per item components are converted into a total rate per kilogramme on the basis of the average of 12.23 items per kilogramme. 11 Article RL 220 describes the steps to be followed for the calculation of the 2017 terminal dues rates using the tariffs for a 20-gramme priority small letter and for a 175-gramme priority large letter in the domestic service. 1.1.1 Example of the calculation of terminal dues rates in the target system for the year 2017 12 A designated operator in the target system prior to 2010 notifies to the UPU International Bureau (IB) the following domestic charges in force on 1 June 2016: 0.3 SDR for a 20-gramme priority small letter and 1.8 SDR for a 175-gramme priority large letter in the domestic service. The rates calculated for the previous year are as follows: 2.25 SDR per kg and 0.25 SDR per item. On the basis of this information the rates for 2017 will be determined as below: i ii iii iv The applicable percentage of domestic charges is 70% (article 30.5). The minimum rates for 2017 are 0.221 SDR per item and 1.729 SDR per kg and the maximum rates are 0.321 SDR per item and 2.507 SDR per kg (article 30.8 and 9). Calculate the rate per kg before application of caps and floors, using the following formula: 70% x (tariff at 175 g - tariff at 20 g)/(0.175-0.01); the resulting rate is 6.364 SDR per kg. Calculate the rate per item before application of caps and floors, using the following formula: 70% of the 20 g tariff minus the rate per kg x 0.01; the resulting rate is 0.146 SDR per item. Calculate the following values for an 81.8-gramme item: TD amount at 81.8 g before the application of caps and floors: 0.146 + 6.364 x 0.081.8 = 0.6669; floor TD amount at 81.8 g: 0.221 + 1.729 x 0.0818 = 0.3624; cap TD amount at 81.8 g: 0.321 + 2.507 x 0.0818 = 0.5261; TD amount of the previous year at 81.8 g: 0.25 + 2.25 x 0.0818 = 0.4341. v Application of caps and floors and of the maximum yearly increase of 13%: The final TD rates should lead to a TD amount at 81.8 g neither higher than the cap TD amount nor higher than the TD amount of the previous year multiplied by 1.13.

7 The amount of 0.667 is higher than the cap TD amount of 0.526. The cap amount is 21% higher than the amount of the previous year. In this case, the final rates will be calculated by increasing the floor rates using the following ratio: 0.4341 x 1.13/0.3624 = 1.3536. The final rate per item, rounded to three decimal places, will be 1.3536 x 0.221 = 0.299 SDR The final rate per kg, rounded to three decimal places, will be 1.3536 x 1.729 = 2.340 SDR 1.2 Rates New target system 13 Terminal dues to, from and between countries in the new target system (group 3 countries as of 2016 and any other transitional country upon voluntary accession) will be paid at the following rates: 2014: 0.203 SDR per item and 1.591 SDR per kilogramme; 2015: 0.209 SDR per item and 1.636 SDR per kilogramme; 2016: 0.215 SDR per item and 1.682 SDR per kilogramme; 2017: 0.221 SDR per item and 1.729 SDR per kilogramme. 14 For flows under 75 tonnes per year, the per-kilogramme and per-item components are converted into a total rate per kilogramme on the basis of the average of 12.23 items per kilogramme. 1.3 Rates Transitional system 15 Terminal dues to, from and between countries in the transitional system will be paid at the following rates: 2014: 0.203 SDR per item and 1.591 SDR per kilogramme; 2015: 0.209 SDR per item and 1.636 SDR per kilogramme; 2016: 0.215 SDR per item and 1.682 SDR per kilogramme; 2017: 0.221 SDR per item and 1.729 SDR per kilogramme. 16 For flows under 75 tonnes per year, the per kilogramme and per item components are converted into a total rate per kilogramme on the basis of the average of 12.23 items per kilogramme, except for the year 2014, for which the total rate per kilogramme of the year 2013 shall apply: 2014: 4.162 SDR per kilogramme; 2015: 4.192 SDR per kilogramme; 2016: 4.311 SDR per kilogramme; 2017: 4.432 SDR per kilogramme. 17 Countries in the target system will pay countries in the transitional system the same rates that countries in the transitional system pay each other. 1.3.1 Revision mechanism 18 Countries in the transitional system may pay or receive item-based rates on mail flows exceeding 75 tonnes per year exchanged with another transitional system country or with a target system country when the average number of items per kg of mail is determined to be: more than 15 (upward revision), less than 10 (downward revision), or has changed by more than 20% from the IPK previously used. Where the revision mechanism is requested, the rates in article 31.3 shall apply.

8 19 The downward revision cannot be requested for mail flows to a transitional system country unless the transitional system country has already invoked the downward revision on its own mail to the target system country. The procedures for applying the revision mechanism are described in chapter II of this Guide. 1.4 Exchange of format-separated mails 20 As of 2014, designated operators in the target system are required (Convention article 30.3) to exchange format-separated mails in accordance with the conditions laid down in the Regulations. Format separation is optional for new target and transition designated operators. 21 Letter-post items are classified on the basis of their format into small letters (P), large letters (G) and bulky letters (E). The limits of size and weight for each format are as follows (RL 122, RL 123 and RL 124): small letters (P): minimum dimensions: 90 x 140 mm; maximum dimensions: 165 x 245 mm; maximum weight: 100 g; maximum thickness: 5 mm. large letters (G): items that cannot be classified as small letters and having minimum dimensions of 90 x 140 mm, maximum dimensions of 305 x 381 mm, maximum weight of 500 g and maximum thickness of 20 mm. bulky letters (E): items classified neither as small letters nor as large letters, with the following size and weight limits: minimum dimensions: 90 x 140 mm; maximum dimensions: 900 mm for length, width and depth combined, with the greatest dimension not exceeding 600 mm; maximum weight: 2 kg (5 kg for items containing books or pamphlets). 22 Pursuant to article RL 175, the separation of mail into three formats (P, G and E) is mandatory for the group 1.1 designated operators for flows to other group 1.1 designated operators, in cases where such annual flows are above 50 tonnes a year. The four most recent quarterly statements of weights should be used as the best indication of mail volumes for the following year. 23 As the separation of mail into three formats (P, G and E) is mandatory for the group 1.1 designated operators for flows to other group 1.1 designated operators, the separation of mail into at least two formats (P/G and E) is mandatory for designated operators in groups 1.2 and 2 for flows to other designated operators in groups 1.1, 1.2 and 2, and for designated operators in group 1.1 for flows to designated operators in groups 1.2 and 2, in cases where such annual flows are above the following thresholds: 125 tonnes in 2014; 100 tonnes in 2015; 75 tonnes in 2016; 50 tonnes in 2017. 24 The separation of mail into three formats is optional for exchanges between group 1.2 and 2 designated operators and designated operators in groups 1.1, 1.2 and 2. 25 The separation of mail into two or three formats is optional for exchanges with future new target and transition countries (article 31.7). If the designated operators concerned agree to send each other formatseparated mails, the per-item and per-kilogramme rates provided for in article 31.3 apply. The designated operators will also have to agree on the average IPK values that will be used for each format: either the IPK values fixed by the POC, or other values agreed bilaterally. 26 Designated operators allowed to separate mail into two formats (S and E) or three formats (P, G and E) are not allowed to switch from one format-separation option to the other with a partner designated operator in the same calendar year. If they wish to change from two to three formats or from three to two, they shall inform the designated operator concerned by 30 September, for application on 1 January of the following year. 27 The practical details (fulfilment of conditions/threshold, etc.) should be the subject of a mutual agreement between the designated operators concerned.

9 1.5 Accession to the target system 28 According to article 29.13 of the UPU Convention, any country may join the target system. The designated operator of the country concerned has to send an official declaration to the International Bureau by 1 June of the year preceding its accession to the target system (RL 216.1), specifying which group it is acceding to. 29 In its declaration, the designated operator should undertake to carry out all the statistical, accounting and other operations involved in participation in the target system and indicate which sets of provisions of the target system would apply: those applicable to countries in the target system prior to 2010, or those applying to countries in the target system as of 2010, as of 2012 or as of 2014 (RL 216.2 and 3). When the sets of provisions chosen entail the calculation of terminal dues rates on the basis of domestic charges, the acceding designated operator should also notify the required domestic charges as per articles RL 220 and RL 221. 1.6 Registered and insured items 30 In addition to terminal dues, all designated operators will pay delivering designated operators 0.617 SDR per item for 2014, 0.634 SDR per item for 2015, 0.652 SDR per item for 2016 and 0.670 SDR per item for 2017 for each registered item they dispatch, and 1.234 SDR per item for 2014, 1.269 SDR per item for 2015, 1.305 SDR per item for 2016 and 1.342 SDR per item for 2017 for each insured item they dispatch, to cover the additional costs incurred in delivering these items. 31 For registered and insured items not carrying a barcode identifier or carrying a non-upu S10 compliant identifier there will be an additional payment of 0.5 SDR per item, unless otherwise bilaterally agreed (article 29.9). Details on the way this provision may be applied are given in chapter III. 32 Article RL 218 provides for supplementary remuneration of 0.5 SDR per item for additional service features for registered, insured and express items. Details on the way these provisions may be applied are given in the user manual for registered, insured and express services available on the UPU website. 1.7 M bags 33 The rates for M bags are the following: for the year 2014, 0.815 SDR per kilogramme; for the year 2015, 0.838 SDR per kilogramme; for the year 2016, 0.861 SDR per kilogramme; for the year 2017, 0.885 SDR per kilogramme. 34 However, M bags weighing less than 5 kg will be charged for terminal dues as if they weighed 5 kg (Convention article 29.7). 1.8 Contributions to the Quality of Service Fund (QSF) 35 Countries in both the target and transitional systems will make an additional payment on the gross terminal dues paid into the QSF account of each developing country that requests such payment. The additional payment will be based on the following percentages: payments to group 5 countries (LDCs) will be made by all countries (excluding other LDCs) at the rate of 20%; payments to group 4 countries will be made by all target countries at the rate of 10%; payments to group 3 countries will be made by target countries in groups 1.1 and 1.2 at the rate of 8% for 2014 and 2015 and 6% for 2016 and 2017, and by target countries in group 2 at the rate of 2% for 2014 and 2015;

10 the combined terminal dues payable into the QSF to countries in groups 3, 4 and 5 will be subject to a minimum of 20,000 SDR per annum for each beneficiary country. The calculation of this amount is described in article RL 243. Examples for this calculation are also given in form CN 64ter. 36 Countries in the transitional system are exempt from paying the higher target system terminal dues unless they dispatch bulk mail to a target system country. 1.9 Bulk mail 37 When a designated operator establishes that it has received bulk mail, it is authorized to request the specific payment of terminal dues for this type of mail. Article RL 126.8 gives the characteristics of bulk mail, in terms of number of items received in one or more dispatches per day or in the period of two weeks, posted by the same sender. 38 The sender of bulk mail is considered to be the person or organization that actually posts the items (RL 126.8.2). If need be, the sender may be identified by any common characteristic of the items or any indication made on the items such as (RL 126.8.3): the return address; the name, mark or stamp of the sender; the postal authorization number. 1.9.1 Rates applicable 39 The remuneration provided for this purpose is indicated in Convention articles 30.14, 30.15 and 31.8: a b c d A designated operator in the target system (group 1.1) that receives bulk mail from any other designated operator may request a rate per item and a rate per kilogramme as provided for in Convention article 30.5 to 9. A designated operator in the target system (group 1.2 and 2) that receives bulk mail from any other designated operator may request a rate per item and a rate per kilogramme as provided for in Convention article 30.5, 30.10 and 30.11. A new target system designated operator that receives bulk mail from any other designated operator may request a rate per item and a rate per kilogramme as provided for in Convention article 30.9. A designated operator in the transitional system that receives bulk mail from any other designated operator may request a rate per item and a rate per kilogramme as provided for in Convention article 31.3. 40 If both designated operators concerned are in the quality of service link to terminal dues (QS Link), or if they are in the target system and are therefore expected to participate in the QS Link as per article RL 221, the bulk mail rates will be the terminal dues rates adjusted with the QS results as notified through IB circulars. If one of the designated operators is not in the QS Link and it is not expected to participate in the QS Link, the bulk mail rates will be the base terminal dues rates, before adjustment for quality of service. 1.9.2 Request for payment specific to bulk mail three month pre-advice 41 A designated operator may claim to have received bulk mail when it establishes (RL 226.1): the receipt, in the same mail or in one day when several mails are made up per day of at least 1,500 items posted by the same sender; the receipt, in a period of two weeks, of at least 5,000 items posted by the same sender. 42 A designated operator of destination that wishes to apply the payment specific to bulk mail must notify the designated operator of origin within two weeks of receiving a dispatch containing bulk mail (RL 226.2). This notification must contain the dispatch number, date of dispatch, origin office of exchange, destination office of exchange and a photocopy of a sample of the mail items in question. This notification must be sent by fax or electronic means to the special address published in the Letter Post Compendium to which all the forms relating to settlement of transit charges and terminal dues must be sent (RL 240).

11 43 The designated operator of destination must wait three months following notification to apply bulk mail rates for qualifying items. 44 During the three months following notification, however, the designated operator of origin may advise the designated operator of destination that it wishes to account for its bulk mail separately and have bulk mail terminal dues applied to all of its bulk mail dispatches, unless the original request by the designated operator of destination is withdrawn (RL 226.5). If the designated operator of origin chooses to account for its bulk mail separately and later decides to terminate this accounting, it must notify the designated operator of destination three months in advance of terminating its separate accounting. Alternatively, the decision to terminate separate accounting for all bulk mail may be made by mutual consent (RL 226.6). 1.9.3 Request for payment specific to bulk mail immediate application of the bulk mail rates 45 A designated operator may request payment of bulk mail rates with immediate effect, without waiting three months, when (RL 226.3): 3,000 or more items posted by the same sender are received in the same dispatch, or in one day when more than one dispatch is made up per day; 10,000 or more items posted by the same sender are received in a period of two weeks. 46 If a designated operator wishes immediate application of bulk mail rates to a mailing it receives, it must notify the designated operator of origin within three days of receiving the bulk mailing. This notification shall be made by CN 43 verification note, specifying the dispatch number, date of dispatch, origin office of exchange, destination office of exchange and a photocopy of a sample of the mail items in question (RL 226.4). This notification, accompanied by a replacement CN 32 letter bill, is to be sent by fax or electronic means to the special address published in the Letter Post Compendium to which all the forms relating to settlement of transit charges and terminal dues must be sent (RL 240). 1.10 Link to quality of service 47 Terminal dues remuneration is based on quality of service performance in the country of destination (Convention article 29.5). Designated operators of countries in the target system are expected to participate in the quality of service link to terminal dues and their remuneration is based on TD rates adjusted on the basis of the quality results. If a country in the target system does not put in place a UPU-agreed measurement system for the link to terminal dues remuneration, it will receive 100% of the TD rates but will pay quality-adjusted rates to the other designated operators in the QS Link. 48 Countries that join the target system from 2014 (new target countries) benefit from a two-year grace period during which they may opt not to link the remuneration to the quality of service results (RL 222.8). Those new target countries that have annual inbound flows lower than 100 tonnes and are not participating in the QS Link will receive from, and pay to, all other DOs 100% of the base TD rates. 49 All countries participating in the QS Link will receive an incentive of 5% for their inward mail flow. Penalties will also be applied for insufficient quality, but will not adjust the rate below the minimum remuneration provided for in the Convention. Subject to the floor in articles 30.9 and 31.3 of the Convention, countries will be liable for a penalty of 1/3% of their terminal dues rate for each percentage of under-performance up to a maximum of 10% (RL 222). Transitional countries may also participate in the quality measurement system and the QS Link. 50 The basic information on how the quality of service link remuneration rules should apply to the calculations of terminal dues adjusted for quality of service is provided below. The quality of service performance calculation is based on the fulfilment of delivery standards against quality of service performance targets approved by the POC. Information on the quality of service standards and targets set by the POC is presented in the GMS QLUG User Manual. 1.10.1 Adjustment of terminal dues rates based on actual quality of service performance Description, formula and examples of the calculation of quality of service-adjusted terminal dues rates 51 The principles for calculating the adjustment of terminal dues rates for quality of service performance are as follows:

12 If the target is achieved, the quality of service link participant will have its base terminal dues rates (100% of the rates calculated as described in the commentary relating to article RL 220) increased by the 5% incentive for participation. If the target is not achieved, the quality of service link participant will have its base terminal dues rates multiplied by a "terminal dues adjustment percentage", which results from the application of the 5% incentive for participation in the quality of service link and of the penalty factor, corresponding to one third of one percent (1/3% or 0.3333%) reduction for each 1% below the performance target. The penalty factor will be applied in such a way that the reduction is no greater than 10% (the minimum applicable "terminal dues adjustment percentage" being 95% of the base terminal dues rates). Furthermore, no quality of service link participant will receive less than the terminal dues floor rates. 1.10.2 Examples of the calculation and application of the "terminal dues adjustment percentage" using the base terminal dues rates, the quality of service targets and the quality results 52 Example A: Participant in the QS Link in 2017 with base terminal dues rates of 0.256 SDR per item and 2.000 SDR per kg, 88% target and 86% actual quality of service performance. "Terminal dues adjustment percentage" = 100% + 5% - (88% - 86%) x 1/3 = 104.33%. 53 The quality of service-adjusted terminal dues rates would be: per item = 104.33% x 0.256 SDR = 0.267 SDR; per kg = 104.33% x 2.000 SDR = 2.087 SDR. 54 Example B: Participant in the QS Link in 2017 with base terminal dues rates of 0.225 per item and 1.764 SDR per kg, 88% target and 60% actual quality of service performance. "Terminal dues adjustment percentage" = 100% + 5% - (88% - 60%) x 1/3 = 95.67%. 55 The quality of service-adjusted terminal dues rates would be: per item = 95.67% x 0.225 SDR = 0.215 SDR; per kg = 95.67% x 1.764 SDR = 1.688 SDR. 56 In this example, the terminal dues rates will be set at 0.221 SDR per item and 1.729 SDR per kg, since the quality of service-adjusted rates cannot be lower than the floor rates. 1.10.3 Provisional QS-linked terminal dues rates 57 The International Bureau will publish, by 1 July of year Y-1, an IB circular with the provisional rates to be applied to the calendar year Y. The provisional terminal dues rates applicable for year Y are based on the domestic tariffs for a 20-gramme priority small letter (P) and the 175-gramme priority large letter (G) tariffs valid at 1 June of year Y-1. The quality of service performance results relating to year Y-2 (or the latest agreed available data) will be applied to adjust the terminal dues rates for quality performance. The IB circular will indicate the following in a table: the country name; the ISO code of its currency; the domestic rate for a 20-gramme priority small letter in national currency; the domestic rate for a 20-gramme priority small letter in SDR; the domestic rate for a 175-gramme priority large letter in national currency; the domestic rate for a 175-gramme priority large letter in SDR; the terminal dues rates per item and per kg in SDR before the addition of the quality of service adjustment; the quality of service-adjusted terminal dues rates per item and per kg in SDR. 1.10.4 Final QS-linked terminal dues rates 58 The International Bureau will publish an IB circular with the final terminal dues rates for year Y on 1 May of year Y+1. The bases for these calculations are the tariffs of year Y-1 and the quality of service results for year Y. The IB circular will indicate the following in a table:

country name; the ISO code of its currency; the domestic rate for a 20-gramme priority small letter in national currency; the domestic rate for a 20-gramme priority small letter in SDR; the domestic rate for a 175-gramme priority large letter in national currency; the domestic rate for a 175-gramme priority large letter in SDR; 13 the terminal dues rates per item and per kg in SDR before the addition of the quality of service adjustment; the final quality of service-adjusted terminal dues rates per item and per kg in SDR. 1.11 Direct access 1.11.1 Regulations and conditions 59 Direct access (access to the domestic service) is regulated by Convention article 29.4 and article RL 217 of the Letter Post Regulations. It is mandatory for DOs that were in the target system prior to 2010. 60 Countries joining the target system from 2010 may opt not to make available direct access to other DOs, or to make direct access available to a limited number of designated operators for a trial period of two years. If the DO of a country in the target system from 2010 requests the designated operators of other target system countries to provide direct access it should itself make direct access available to all other designated operators. 61 Transition system countries may opt not to make available direct access to other DOs, or to make direct access available to a limited number of designated operators for a trial period of two years. 1.11.2 Direct access database and operational guide 62 The International Bureau maintains a Direct Access Database on the UPU website containing information on domestic tariffs, terms and access conditions. A Direct Access Operational Guide, containing practical information on operations, documentation and accounting, is also available on the UPU website. 1.12 International business reply service (IBRS) 63 IBRS is regulated by article RL 144 of the Letter Post Regulations. Gross weight for receptacles and net weight for bundles shall be taken into account. Unless the designated operators concerned decide otherwise, IBRS charges shall not be paid when the aggregated annual number of IBRS items and CN 07 forms (advice of delivery) returned by each designated operator is equal to or lower than 1,000. When the aggregated annual number of IBRS items and CN 07 forms returned exceeds 1,000 for one designated operator, the amount paid shall take into account the aggregated number of IBRS items and CN 07 forms returned by both designated operators. Designated operators returning IBRS items to other designated operators are entitled to collect from those designated operators a charge per item and a charge per kilogramme, calculated as follows: charge per item: 80% of the terminal dues rates for bulk mails of the designated operator returning the IBRS items, with a total annual floor charge of 0.150 SDR per item; charge per kilogramme: calculated on the basis of the distance between the offices of exchange of the two designated operators concerned, the basic air conveyance rate fixed by the POC for the year in question and the weight of items, plus a rate for handling transit dispatches of 0.530 SDR per kg as set in article RL 208.1.1. 1.12.1 Example of calculating IBRS rates 64 Designated operator A is returning 1,700 IBRS items weighing 25 kg to designated operator B in 2017. The distance between the offices of exchange of the two designated operators is 10,000 km. Designated operator A is not part of the QS Link, but designated operator B is. In this case, the rates used for the calculation of IBRS charges will be the base TD rates, prior to any adjustment for quality. The base TD rates of designated operator A for the year concerned are 0.321 SDR per item and 2.507 SDR per kg.

14 65 The basic air conveyance rate for 2017 is 0.000597 SDR per kg and km. 66 The IBRS rates will be calculated as follows: i the base handling charge per item/kg will be: 80% x (0.321 x 1,700 items + 2.507 x 25 kg) = 487 SDR; ii the basic air conveyance charge per kg will be: 25 kg x (0.530 + 0.000597 x 10,000 km) = 162.500 SDR; iii the total amount due will be: 487 SDR + 162.500 SDR = 649.500 SDR. 67 The total amount due from designated operator B to designated operator A for the return of IBRS items will be 649.500 SDR. 68 If both designated operators were in the QS Link, or if they were in the target system and expected to participate in the QS Link, then the TD rates used as the basis for the calculation of IBRS charges per item would have been those adjusted with the QS results. 1.13 Advice of delivery service (AR) 69 As from 1 January 2014, designated operators returning advices of delivery (CN 07 or the electronic advice of delivery where this service is offered) to other designated operators will receive from the latter remuneration for the costs incurred at the same level as for the IBRS items (RL 141.4). For accounting purposes, the advice of delivery is recorded, combined with IBRS, on the CN 31. 2 Transit: conveyance and charges 2.1 Conveyance to the country of destination 70 When the designated operator of origin dispatches its mails to a country of destination, it may: a b conclude direct agreements with carriers for conveyance to the country of destination; or hand its mails over to an intermediate designated operator for forwarding to the country of destination. 2.1.1 Conveyance provided direct by a transport company 71 In the first case, the designated operator of origin pays the carrier (shipping line, road transport company, railway company or airline) for the transport performed. No intermediate designated operator is involved, and no transit charges are payable. However, if another country is crossed in the course of conveyance, the designated operator of that country must be informed in advance (RL 174 and 176). Where airmails are sent in transit via a third party by air and the transhipment is undertaken by the airline, no transit charges are applicable. 2.1.2 Conveyance provided by another designated operator 72 In the case of transit services, the intermediate designated operator must be paid a rate for the cost incurred by the services rendered (Convention article 33). The transit charges are specified below. 2.1.3 Charges for closed transit 73 For land transit, the distance traversed by mails whose onward transmission was provided by the country of transit must first be determined by reference to the List of Kilometric Distances in the Transit Manual; once the distance has been determined, the corresponding land transit charge is to be applied. The land transit charge is composed of a handling rate per kg of 0.530 SDR (RL 208.1.1) plus a rate based on distance set out in article RL 208.1.2.2. The sum of the two components is to be entered on the CN 62 detailed account.

15 74 For sea transit, the transit charge given in the List of Transit Services for Surface Mail (including S.A.L.) in the Transit Manual is used. This charge is composed of the same handling rate as for land transit (RL 208.1.1) plus the sea transport rate set out in article RL 208.1.2.3. The sum of the two components is to be entered on the CN 62. 75 For transit by combined land and sea transport facilities and for reforwarding of S.A.L., the rate fixed by bilateral agreement between the designated operator of transit and the designated operator of origin is used (RL 210.2); in the absence of a rate fixed by bilateral agreement, the designated operator of transit applies the rate given in the List of Transit Services for Surface Mail (including S.A.L.). 76 For air transit, the transit charge is composed of a handling rate per kg of 0.530 SDR (RL 208.1.1) plus a conveyance rate per kg based on distance set out in article RL 208.1.2.1. The air conveyance rate per kg and km should not be higher than the basic air conveyance rate calculated on the basis of article RL 244.2. The distance is determined by reference to the List of Airmail Distances. 2.2 Transit of à découvert items and missent items 77 Items may be sent à découvert when the total weight of the items dispatched to a particular country of destination is less than 3 kg per mail or per day. A closed transit dispatch must be made up if the mail exceeds these limits or if several mails are received in a day (RL 176.1). 78 For items sent à découvert without prior consultation to an intermediate designated operator, destined for countries other than those notified by the intermediate country in the Transit Compendium, the charges provided for missent items may be applied (RL 176.4). 2.2.1 Charges for transit à découvert (open transit) items (RL 211) 79 Transit charges for items in transit à découvert consist of a handling rate per kg, a transport rate per kg and terminal dues increments. The handling rates are those indicated in article RL 208.1.1. The transport rates for items forwarded by surface are calculated, in principle, as indicated in article RL 208.1.2.2, according to the net weight. The transport rates for items forwarded by air are calculated, in principle, as indicated in article RL 244.3, according to the net weight. Terminal dues increments are calculated based on average differences between the terminal dues received by the DO of transit and those paid to the DO of destination. The transit charges are fixed on the basis of no more than 10 average rates, each relating to a group of countries of destination and fixed according to the conveyance and handling costs as well as terminal dues increments for the different destinations within the group. The sum of these dues will be increased by 10% for the surface transit items and by 5% for the air transit items (RL 211.1.4). 80 When S.A.L. items are forwarded by normal airmail they are governed by the provisions for à découvert airmail items and are thus subject to the payment of air conveyance dues calculated according to article RL 211.1.3.2. 81 Amendments to rates and groups of destinations for transit à découvert purposes are notified in accordance with article RL 249. The International Bureau should receive the notifications by 30 September for publication in the transit manual by 1 December. The notified rates enter into force on 1 January of the following year. 82 Examples of groupings of countries and calculation of transport rates for items received in transit à découvert and forwarded by surface are given below. 83 The countries of destination for which the transit country is willing to handle à découvert items are as follows:

Countries of destination Distance (km or nautical miles) 16 Type of conveyance Transport rate per kg according to article RL 208 (SDR) Yearly volume of mail to each country on basis of data available (in kg) A 1,170 Land 0.230 300 B 2,620 Land 0.461 150 C 7,260 Land 1.015 250 D 2,730 Land 0.475 200 E 5,160 Land 0.805 120 F 2,480 Land 0.433 80 G 6,535 Land 0.945 70 H 4,650 Sea 0.192 270 I 7,240 Sea 0.250 320 J 3,270 Land 0.545 60 84 It is up to the postal operator of transit to decide on the number of groups. The criterion generally used is similarity of transport charges. The groups should be formed in such a way that one or more groups contain only target countries. In the example above, if the option involved three groups, these could be formed as follows: Group 1, consisting of countries A, H and I. The weighted average transport rate per kg of items received in transit à découvert and forwarded to this group of countries will be: (0.230 x 300 + 0.192 x 270 + 0.250 x 320)/(300 + 270 + 320) = 0.226 SDR. Group 2, consisting of countries B, D, F and J. The weighted average transport rate per kg of items received in transit à découvert and forwarded to this group of countries will be: (0.461 x 150 + 0.475 x 200 + 0.433 x 80 + 0.545 x 60)/(150 + 200 + 80 + 60) = 0.472 SDR. Group 3, consisting of countries C, E and G. The weighted average transport rate per kg of items received in transit à découvert and forwarded to this group of countries will be: (1.015 x 250 + 0.805 x 120 + 0.945 x 70)/(250 + 120 + 70) = 0.947 SDR. 85 Terminal dues increments for items in transit à découvert forwarded to countries of destination in the target system are calculated as follows: The terminal dues increment for mail received in transit à découvert from countries in the transitional system is calculated as the difference between the average terminal dues rate per kg receivable for mail in transit à découvert from transitional countries over a calendar year and the weighted average terminal dues rate per kg payable for mail sent to the target countries. The terminal dues increment for mail received in transit à découvert from countries in the target system is calculated as the difference between the average terminal dues rate per kg receivable for mail in transit à découvert from target countries over a calendar year and the weighted average terminal dues rate per kg payable for mail sent to the target countries. Weighting is based on the total volumes of mail sent to the respective destinations in the latest available year. 86 Every year the international Bureau notifies to member countries the maximum increment that can be charged by a country of transit on the basis of the data from the IPK study and the TD rates applicable under the UPU provisions. 2.2.2 Example of calculation of TD dues increments for 2014 87 The terminal dues rates used should be those of 2014, as indicated in International Bureau circular 111 of 1 July 2013.

Calculation of the average terminal dues rate receivable per kg of mail applicable in 2014 17 Country of origin Volume structure of mail received (2012 or latest year available) Rate per item (provisional 2014 rates in SDR) Rate per kg (provisional 2014 rates in SDR) Average number of items per kg (2012 or latest year available) Terminal dues rate receivable per kg (SDR) Transitional countries 25% 4.162 Target countries 75% 0.257 2.010 14 5.608 Weighted average terminal dues rate receivable per kg (SDR) 100% 5.247 Calculation of the average terminal dues rate payable per kg of mail applicable in 2014 Country of destination (target countries only) Volume structure of mail sent (2012 or latest year available) Rate per item (provisional 2014 rates in SDR) Rate per kg (provisional 2014 rates in SDR) Average number of items per kg (2012 or latest year available) Terminal dues rate payable per kg (SDR) A 6% 0.294 2.294 18.6 7.762 B 25% 0.294 2.294 13 6.116 C 8% 0.288 2.252 21 8.300 D 8% 0.238 1.861 16 5.669 E 10% 0.264 2.059 20 7.339 F 13% 0.244 1.904 12 4.832 G 30% 0.277 2.162 13 5.763 Weighted average terminal dues rate payable per kg (SDR) 100% 6.203 88 Calculation of the terminal dues increment rate to be charged by the transit designated operator for items received in transit à découvert and forwarded to countries in the target system: 6.203-5.247 = 0.956 SDR 2.2.3 Charges for missent items (RL 211.1.5) 89 Designated operators forwarding missent items have the right to collect from the designated operator of origin the charges for à découvert items calculated according to article RL 211.1.2 to RL 211.1.4, plus an additional charge of 2 SDR/kg. 2.3 Return of empty bags 2.3.1 Rates for empty bags surface 90 Mails of empty bags are subject to payment of 30% of the transit charges applicable to letter-post mails, i.e. 30% of the transit charges in article RL 208 (RL 214.1).

18 91 Designated operators that return empty bags are entitled to the reimbursement of costs in their country if the weighted average distance for the transport to the border exceeds 300 km. The transport charge, but not the handling charge, is paid for the number of km exceeding 300 (RL 214.2). 92 The transport charge payable for transport within the country returning the bags is based on a single price per kg. This single price includes the transport charge within the country, between the different offices of exchange and borders. It is calculated on the basis of the rates actually paid for conveyance of the mail within the country of destination, but not exceeding the transport charge defined in article RL 208. The weighted average distance is calculated by the International Bureau in terms of the gross weight of all the empty bag dispatches sent from the country concerned (RL 214.3). 93 Examples: i Situation of designated operator X: 900 kg empty bags are returned by ship from city A where the exchange office is situated, i.e. distance 0 for these bags. 800 kg empty bags are returned to the border of country B. The distance from city A to this border is 500 km. 300 kg empty bags are returned to the border of country C. The distance from city A to this border is 480 km. The weighted average distance is 272 km and the country concerned will not be entitled to claim reimbursement of costs of transportation back to the borders, see table below: Mail volume kg Distance km Product of mail volume & distance 900 0 0 (or 900 x 0) 800 500 400,000 (or 800 x 500) 300 480 144,000 (or 300 x 480) Total weighted average distance 2,000 (or 900 + 800 + 300) 272 (or 544,000/2,000) 544,000 (or 0 + 400,000 + 144,000) ii Situation of designated operator Y: 800 kg empty bags are returned from the exchange office in city A to the border of country B. The distance from city A to this border is 500 km and the price actually paid to the transport company for the conveyance is 0.150 SDR. 400 kg empty bags are returned to the border of country C. The distance from city A to this border is 800 km and the price actually paid to the transport company for the conveyance is 0.170 SDR. The weighted average distance is 600 km. Thus the designated operator concerned will be entitled to reimbursement of the transportation costs for 300 km. Since the weighted average price paid is higher than the land transport rate according to article RL 208.1.2, it will be entitled to the latter rate, which for the 201 to 300 km range is 0.050 SDR. 2.3.2 Rates for empty bags air 94 Empty bags were transported free by airlines up to 31 December 2000. Since 1 January 2001, however, airlines may bill designated operators for transporting empty airmail bags back to the designated operator that owns them. 95 The rate payable for their transport should be at most 30% of the basic airmail conveyance rate determined using the formula in RL 244.2. 96 Air conveyance dues for the transport of empty bags are payable by the designated operator owning the bags (RL 214.1). 97 Examples:

19 a b The Senegal designated operator receives priority airmails from France. It must return the empty bags to France. France, as the designated operator that owns the bags, must pay for their transport from Senegal back to France. The Indian designated operator has received priority airmails from Great Britain and must return the empty airmail bags to Great Britain. India, in agreement with Great Britain, returns these bags in transit via Zurich with direct transhipment at Zurich. The Swiss designated operator is not involved. Great Britain will pay for the cost of returning these bags, i.e. pay for air transport from India to Switzerland and from Switzerland to Great Britain. (Should the Swiss designated operator be involved in handling the dispatch of empty bags, it will be entitled to claim transit charges for handling the dispatch. Transit charges are dealt with separately in this guide.) 3 Exemption from terminal dues 98 Letter-post items relating to the postal service (as defined in RL 110.2: items exchanged between bodies of the Universal Postal Union and of the restricted unions, exchanged between bodies of those unions, or sent by such bodies to designated operators or their offices), undelivered items returned to origin in closed dispatches, mails of empty receptacles and IBRS and AR (CN 07) items are exempted from terminal dues (RL 215.3) but not from transit charges.

20 Chapter II Statistical operations related to terminal dues 1 Introduction 1 A statistical count of letter-post flows is required to determine the number of items in a mail flow for: the target country system, which applies to flows between target countries, as defined by the 25th Congress (resolution C 77/2012) and listed in Appendix D; the revision mechanism. This mechanism may be applied to flows between target and transitional countries, or to flows between transitional countries. Target and transitional countries were defined by the 25th Congress (resolution C 77/2012) and are listed in Appendix D. 2 For more detailed descriptions of these systems and their applicable terminal dues rates, please see chapter I. 1.1 The target country system 3 The target system requires designated operators to perform an ongoing statistical count to measure the average number of items per kilogramme (IPK) specific to a letter-post mail flow (excluding M bags). This IPK will be used to calculate the total number of items exchanged against which the target country system terminal dues rate per item applies. The terminal dues rates under the target country system are provided in Convention article 30 and in chapter I of this Guide. 4 For mail flows to, from, and between designated operators of countries in the target system as of 2010 and later, a statistical count shall be carried out above the threshold of 75 tonnes. The average number of items per kilogramme applied between countries of the transition system shall be applied to mail flows below the threshold of 75 tonnes (Convention article 30.13). 5 If target countries bilaterally agree that sampling mail is not cost effective, or that performing accurate sampling is difficult, the average target country IPK fixed by the POC, and reflected in an International Bureau circular for the related time period, may be used. Unless one or both designated operators insist on sampling to know the exact number of items per kilogramme for exchanges of mixed mails in one or both directions between countries in the target system prior to 2010, designated operators of countries in the target system that receive the terminal dues rates provided for in article 30.8 of the Convention shall apply a threshold of 25 tonnes to avoid sampling; the threshold of 45 tonnes to avoid sampling shall apply to the other designated operators of countries in the target system prior to 2010;. Target countries may alternatively agree on any other method to determine the IPK to be applied to the above-mentioned flows. 6 Target countries that currently sample and wish to cease sampling on one or more of their particular flows must notify the corresponding target countries at least two months in advance of the beginning of the year in question, in accordance with RL 229. 1.2 The revision mechanism 1.2.1 What is the revision mechanism? 7 The revision mechanism is a special statistical count to calculate the average number of items per kilogramme (IPK) specific to a letter-post mail flow (excluding M bags). This IPK will be used to calculate a revised terminal dues rate per kilogramme by applying the following formula (RL 225): Revised rate = (IPK x rate per item provided for in article 31.3) + rate per kg provided for in article 31.3. 1.2.2 Triggering the mechanism 8 The revision mechanism may be applied when a given mail flow exceeds 75 tonnes per year if (RL 225.1.2, 225.1.3, 225.1.5):

the average number of items (IPK) is more than 15 (upward revision); the IPK is less than 10 (downward revision); 21 the IPK received from, or dispatched to, another designated operator has changed by more than 20% from the original IPK used to establish a revised rate per kilogramme under a previous application of the revision mechanism. 9 In cases where the number of items per kilogramme resulting from this revision falls between 10 and 15, the rate provided for in article 31.4 of the Convention will apply to the traffic in question. In addition, sampling for items per kilogramme will cease if the average number of items per kilogramme falls between 10 and 15, until such time as the conditions for sampling have been satisfied and sampling has been reactivated. 1.2.3 "Upward" revision mechanism 10 When the flow has an IPK over 15, it would be advisable for the receiving country of that flow to request revision of the terminal dues rate to benefit from a revised rate higher than the rate provided for in article 31.4 of the Convention. This is the "upward" revision. The upward revision mechanism may be applied by either a target or transitional country to flows to or from a transitional country (RL 225.1.1 and RL 225.1.3). 1.2.4 "Downward" revision mechanism 11 When the flow has an IPK under 10, it would be advisable for the dispatching country of that flow to request revision of the terminal dues rate to benefit from a revised rate lower than the rate provided for in article 31.4 of the Convention. This is the "downward" revision. 12 The "downward" revision cannot be invoked by a target country for a flow destined for a transitional country, unless the downward revision was invoked by the sending transitional country on its own mail to the target system country (RL 225.1.2.1). 1.2.5 Conditions for request 13 The request for application of the revision mechanism must be based on preliminary statistical data showing that the IPK of the flow in question is above 15 or below 10. These data must be obtained from a sampling of at least six observation days over a period of one month (RL 225.4). In carrying out this sampling, invoking countries may refer to section 2 below, making appropriate adjustments as to the period of the statistical operations. 1.2.6 Deadlines for request 14 The request for application of the revision mechanism may be made at any time of the year. However, the invoking country intending to apply the revision mechanism must notify the corresponding country at least three months in advance (RL 225.3). The statistical period commences at the beginning of a quarterly accounting period and the new rate takes effect from that date (RL 225.5). 15 Example: Request made on 15 February End of three month notice: 15 May Start of quarterly accounting period: 1 July Date new rate takes effect: 1 July 1.2.7 Duration of new rate 16 The new revised rate remains in force for at least one year and until such time as a new revision is requested by one of the countries concerned using the procedure described above (RL 225.5). In cases where the IPK resulting from the revision falls between 10 and 15, the rate provided for in article 31.4 of the Convention applies to the traffic in question (RL 225.7).

22 2 Overview of the statistical process 17 To establish the IPK of a mail flow under the target country system or under the revision mechanism, a statistical count must be made. This statistical count consists of a sampling of the flow concerned (RL 229.1, RL 225.2). Sampling is necessary since it is impractical to count the number of items contained in every receptacle of mail in this flow. 2.1 General principles 18 Designated operators must adhere to certain principles for statistical sampling and IPK estimation for the statistical results to be valid (RL 228). The requirements of RL 228 are restated below: "1.1 Both sampling and estimation of the average number of items per kilogramme shall reflect the composition of the mail. As the composition of the mail varies with transportation mode, format, container type, time of the year (month), and day of week, the sample of the mail shall reflect these variations and resemble, as closely as is practical, the entire mail flow. Likewise, the method of estimation shall also reflect these variations." From this, it follows that stratified sampling is to be applied. The mail flow to be sampled shall be divided into strata (subpopulations) by quarter, mail category, and format. If appropriate, additional separation by receptacle type and sending and receiving office of exchange might be applied. Sampling and estimation is performed independently for each stratum. "1.2 The statistical sampling programme shall be designed to achieve a target statistical precision of ± 5% with 95% confidence and an estimate of IPK of the average number of items per kilogramme and of the number of items exchanged between designated operators." It is recommended to apply the statistical precision of ± 7% and ± 15% with 95% confidence and an estimate of IPK of the average number of items per kilogramme and the number of items exchanged between designated operators for P/G format and E format, respectively. UR dispatches of registered mail and express letter-post items designated by dispatch mail subclass code UX shall be included in calculating the overall statistical precision. Sample sizes per stratum should be either at least 30 receptacles or about one third of the total number of receptacles of a stratum. This means that a DO is not obliged to sample more than one out of three receptacles per stratum, which takes precedence over the 30 receptacles where stratum volumes are small. For strata with a sampling rate greater than three it might not be sufficient to have a sample size of 30 receptacles in order to achieve the accuracy targets. The CN 54 and CN 54bis forms only cover quarters (and not months) for the sampling period and estimates. "1.2.1 This target statistical precision defines a goal that all designated operators which conduct sampling should attempt to achieve through their designs. It does not define a minimum precision requirement. "1.3 The design of the sampling programme, the selection of the samples, the method of collecting data and the estimation process shall conform to generally accepted principles of mathematical statistics, probability sampling theory, and design of statistical surveys. "1.4 Within the constraints of these principles, each designated operator has sufficient flexibility to adapt the design of its sampling programme to the attributes of its mail flow and its resource constraints. However, each designated operator must notify the corresponding designated operator of its design decisions, including estimation approach, in advance of the observation period." 19 There are three phases in the statistical process: sample selection, data collection and estimation. The standard approach for these phases is summarized briefly below. 2.2 Sample selection for target system DOs (RL 229) 20 According to article RL 229, the statistical count can consist of either of the following: Designated operators may employ continuous sampling, in which a systematic or randomized sample of receptacles is computer-selected for testing throughout the observation period. This method is recommended. The designated operators concerned shall agree on the statistical forms to be used.

23 Alternatively, for the years up to and including 2019, the statistical count may be carried out employing 48 days of observation per year of sampling with four days per month. As it takes time to implement new IT systems and some new countries joined the target system in 2016, it is proposed to give a three-year grace period in which 48-day sampling can be used. The first year for mandatory continuous sampling will be 2020. Within an observation day, designated operators may employ subsampling if it is not feasible to conduct a complete count of all the mail received during the day concerned. The receiving designated operator shall not be required to notify the dispatching designated operator in advance of the observation days or mail receptacles that are selected for sampling. Examples of possible distributions of observation days across the year of sampling are given in tables 1 and 2 below. If an operator corrects the format, the same principles shall be followed for receptacles selected for sampling and receptacles not selected for sampling (mislabelled by format). Table 1: Structure for six-day operation from Monday to Saturday Month Monday Tuesday Wednesday Thursday Friday Saturday Total observation days per month January 1 1 1 1 4 February 1 1 1 1 4 March 1 1 1 1 4 April 1 1 1 1 4 May 1 1 1 1 4 June 1 1 1 1 4 July 1 1 1 1 4 August 1 1 1 1 4 September 1 1 1 1 4 October 1 1 1 1 4 November 1 1 1 1 4 December 1 1 1 1 4 Number of observations of the day of the week per year 8 8 8 8 8 8 48

24 Table 2: Structure for a five-day operation from Monday to Friday Month Monday Tuesday Wednesday Thursday Friday Total observation days per month January 1 1 1 1 4 February 1 1 1 1 4 March 1 1 1 1 4 April 1 1 1 1 4 May 1 1 1 1 4 June 1 1 1 1 4 July 1 1 1 1 4 August 1 1 1 1 4 September 1 1 1 1 4 October 1 1 1 1 4 November 1 1 1 1 4 December 1 1 1 1 4 Number of observations of the day of the week per year 9 10 10 10 9 48 21 It is strongly recommended to apply continuous sampling rather than using the "48 days sampling method". In addition, a computerized sample receptacle selection process is preferable to a manual selection process. A computerized sample receptacle selection process can be performed systematically or by random selection. 22 Sampling is performed independently at least for each quarter, mail category (airmail, surface and S.A.L.) and format within a flow. 23 The table below is provided as a simplified illustration of approximate rates of sampling based upon the annual size of the flow across all mail categories. A strict use of this table may result in either less or more sampling than necessary to obtain a reasonably accurate estimate; the statistical precision must be monitored to fully determine the appropriate rate of sampling and to ensure representative results. Annual weight (kg) Sampling rate in case of 48-day sampling Sampling rate in case of continuous sampling Below 25,000 Every receptacle Every 3rd receptacle 25,000 to 50,000 Every receptacle Every 4th receptacle 50,001 to 75,000 Every receptacle Every 6th receptacle 75,001 to 100,000 Every receptacle Every 7th receptacle 100,001 to 150,000 Every 2nd receptacle Every 11th receptacle 150,001 to 250,000 Every 3rd receptacle Every 19th receptacle 250,001 to 500,000 Every 6th receptacle Every 38th receptacle 500,001 to 750,000 Every 9th receptacle Every 56th receptacle 750,001 to 1,000,000 Every 11th receptacle Every 75th receptacle 1,000,001 and above Every 17th receptacle Every 112th receptacle

Notes: Sampling rates given in the tables may differ from those calculated by the SampleRatesModel. 25 Format separation is not covered in the given examples. 2.2.1 Example of sample selection 24 The DO of target system country A receives mail subject to sampling from the DO of target system country B. 25 The DO of country A has six working days per week and 300 working days per year. 26 The weight and the number of receptacles of inward mail for the previous year by mail category are the following: Mail category Weight per year (kg) No. of receptacles per year Airmail 1,120,000 80,000 S.A.L. 195,000 15,000 Surface 300,000 20,000 Total 1,615,000 115,000 27 In case of 48-day sampling, the following steps could be followed: i ii iii Determination of observation days: The DO could choose the distribution of observation days presented in table 1 under paragraph 17 above (see paragraph 20). Determination of sampling rate: On the basis of the information on flows for the previous year and using the illustrative sampling rates for the 48-day sampling provided above for the total weight of mail, a sampling rate of one receptacle out of 17 may be applied (see paragraph 23). Determination of the minimum sample size per observation day: The number of receptacles that would be received per day of observation is obtained by dividing the number of receptacles received during the previous year by the number of working days. 28 The minimum number of receptacles to be sampled per day would be calculated by dividing the number of receptacles to be received per day by the sampling rate (e.g. 17, as determined under ii. above). Mail category No. of receptacles to be received per day No. of receptacles to be sampled per day Airmail 267 16 S.A.L. 50 3 Surface 67 4 Total 383 23 29 This could result in the sampling of receptacles #1, #18, #35,.., #239, #256 for airmail, receptacles #1, #18, #35 for S.A.L., receptacles #1, #18, #35, #52 for surface. If mail is received at irregular intervals and the minimum sample size cannot be reached during the observation day, the count may be resumed in subsequent days until the minimum has been reached. 30 The minimum sample size for the 48 days of observation results from the number of receptacles sampled per observation day multiplied by 48:

26 Mail category No. of receptacles to be sampled over 48 days Airmail 753 S.A.L. 141 Surface 188 Total 1,082 31 In case of continuous sampling, the following steps could be followed: i ii Determination of sampling rate: On the basis of the information on flows for the previous year and using the illustrative sampling rates for continuous sampling provided above for the total weight of mail, a sampling rate of one receptacle out of 112 may be applied (see paragraph 23). Determination of the minimum sample size per observation day: The number of receptacles that would be received per day of observation is obtained by dividing the number of receptacles received during the previous year by the number of working days. 32 The minimum number of receptacles to be sampled per day would be calculated by dividing the number of receptacles to be received per day by the sampling rate (e.g. 112, as determined under ii above). Mail category No. of receptacles to be received per day No. of receptacles to be sampled per day Airmail 267 2 S.A.L. 50 0.5 (1 receptacle every 2 days) Surface 67 0.5 (1 receptacle every 2 days) Total 383 3 33 The minimum sample size for the year of observation (consisting of 300 working days) results from the number of receptacles sampled per observation day multiplied by 300: Mail category No. of receptacles to be sampled over the year of observation Airmail 600 S.A.L. 150 Surface 150 Total 900 2.3 Sample selection for the revision mechanism (RL 232) 34 It is recommended that countries invoking the revision mechanism carry out the statistical count on the basis of continuous sampling, in which a systematic or randomized sample of receptacles is computerselected for testing throughout the observation period (RL 232.1.1.1). Alternatively, they may carry out the statistical count on the basis of at least 24 days of observation within a 12-month period, as described below (RL 232.1.2): i ii iii Yearly basis: at least 24 days of observation within a 12-month period, with each working day of the week observed at least once per quarter. Here again, it is recommended that designated operators employ continuous sampling, in which a systematic or randomized sample of receptacles is computerselected every working day for testing throughout the observation period. Quarterly basis: sampling is conducted at least six observation days in the quarter, with each working day of the week observed at least once per quarter. Monthly basis: all sampling is conducted within a single month over 24 observation days or, failing that, all the working days for that month. Testing on a monthly basis will occur during May in 2015 and 2017

27 and during October in 2014 and 2016. This continues the past practice of scheduling sampling either in May (in odd years) or October (in even years), to coincide with the statistical sampling required for transit à découvert mail (RL 211.2.1). 35 Examples of possible distributions of observation days across the year of sampling in case of yearly or quarterly sampling are given in tables 1 and 2 below. Table 1: Structure for six-day operation from Monday to Saturday Month Monday Tuesday Wednesday Thursday Friday Saturday Total observation days per month January 1 1 2 February 1 1 2 March 1 1 2 April 1 1 2 May 1 1 2 June 1 1 2 July 1 1 2 August 1 1 2 September 1 1 2 October 1 1 2 November 1 1 2 December 1 1 2 Number of observations of the day of the week per year 4 4 4 4 4 4 24

28 Table 2: Structure for a five-day operation from Monday to Friday Month Monday Tuesday Wednesday Thursday Friday Total observation days per month January 1 1 2 February 1 1 2 March 1 1 2 April 1 1 2 May 1 1 2 June 1 1 2 July 1 1 2 August 1 1 2 September 1 1 2 October 1 1 2 November 1 1 2 December 1 1 2 Number of observations of the day of the week per year 5 5 5 5 4 24 36 Sampling is performed independently for each mail category (airmail, surface and S.A.L.) and, where format separation is applied, for each format, within a flow. Within an observation day (for a country and mail category), sampling is performed either on all of the mail, or a sub-sample of receptacles. 37 The table below is provided as a simplified illustration of approximate rates of sampling based upon the annual size of the flow across all mail categories. A strict use of this table may result in either less or more sampling than necessary to obtain a reasonably accurate estimate; the statistical precision must be monitored to fully determine the appropriate rate of sampling and to ensure representative results. Annual weight (kilogrammes) below 150,000 Sampling rate in the case of 24-day sampling Every receptacle 150,001 to 250,000 Every 2nd receptacle 250,001 to 500,000 Every 3rd receptacle 500,001 to 750,000 Every 4th receptacle 750,001 to 1,000,000 Every 6th receptacle 1,000,001 and above Every 9th receptacle 2.3.1 Example of sample selection 38 The DO of transition system country A receives mail subject to sampling for the revision mechanism from the DO of country B. 39 The DO of country A has six working days per week and 300 working days per year. 40 The weight and number of receptacles of inward mail for the previous year by mail category are the following:

29 Mail category Weight per year (kg) No. of receptacles per year Airmail 420,000 30,000 S.A.L. 130,000 10,000 Surface 75,000 5,000 Total 625,000 45,000 41 In case of 24-day sampling, the following steps could be followed: i ii Determination of observation days: The DO could choose the distribution of observation days presented in table 1 under paragraph 34 above. Determination of sampling rate: On the basis of the information on flows for the previous year and using the illustrative sampling rates for the 24-day sampling provided above for the total weight of mail (see paragraph 37), a sampling rate of one receptacle out of four may be applied. iii Determination of the minimum sample size per observation day: The number of receptacles that would be received per day of observation is obtained by dividing the number of receptacles received during the previous year by the number of working days. 42 The minimum number of receptacles to be sampled per day would be calculated by dividing the number of receptacles to be received per day by the sampling rate (e.g. four, as determined under ii above). Mail category No. of receptacles to be received per day No. of receptacles to be sampled per day Airmail 100 25 S.A.L. 33 8 Surface 17 4 Total 150 37 43 This could result in the sampling of receptacles #1, #5, #9,, #93, #97 for airmail, receptacles #1, #5,, #25 and #29 for S.A.L., receptacles #1, #5, #9 and #13 for surface. If mail is received at irregular intervals and the minimum sample size cannot be reached during the observation day, the count may be resumed in subsequent days until the minimum has been reached. 44 The minimum sample size for the 24 days of observation results from the number of receptacles sampled per observation day multiplied by 24: Mail category No. of receptacles to be sampled over 24 days Airmail 600 S.A.L. 192 Surface 96 Total 888 2.4 Data collection 2.4.1 Preliminary considerations 45 Before starting the statistical operations at the offices of exchange, the following points should be borne in mind: i the sample must be taken, as applicable, from outward or inward international priority (or air) and nonpriority (or S.A.L. and surface, separately) mail;

30 ii iii iv v vi vii viii ix x registered letter-post items designated by dispatch mail subclass code UR and express letter-post items designated by dispatch mail subclass code UX shall be excluded from statistical sampling. The statistical values shall instead be based on the actual counts of registered and express items recorded on forms CN 31, CN 33, CN 55 and CN 56 (RL 229.8). This means that only registered and express items dispatched in separate UR and UX dispatches will be excluded from sampling; for operational, statistical and accounting purposes, registered, insured and express items shall be treated as bulky letters (E) regardless of their actual shape (RL 175.11); for operational, statistical and accounting purposes, items smaller than small letters (P) shall be treated as small letters (P); the sampling must cover only mails from/for the designated operator with which the target country system or the revision mechanism applies. The sampling should take account of items sent in transit à découvert (including missent items) in those mails; M bags have a payment per kilogramme separate from terminal dues and thus are not to be included in the statistical operations; the same applies to empty receptacles and receptacles containing items exempt from terminal dues (RL 215.3); for IBRS and AR items, remuneration is due by the destination country according to RL 144.4.1, and they should not be included in the statistical operations. Where there are ordinary and IBRS and AR items in a sampling receptacle, the number of IBRS and AR items and the IBRS and AR weight have to be deducted from the weight and number of items reported on the CN 53, if identified on the bag label as per article RL 184.2; remuneration specific to bulk mail is payable according to articles 30.14, 30.15 and 31.8 of the Convention and RL 226 and should not be included in the statistical operations; on each observation day, the items received or dispatched, as applicable, during a period of 24 hours must be analyzed, irrespective of the date on which the mails were made up. The 24-hour cycle is determined by the characteristics of the office of exchange. It need not start at midnight; for instance, it may start at 6.00 on one day and last until 6.00 on the next day; the operations require accurate scales for weighing the items and receptacles. For weights up to 30 kg, the scales must have a resolution of at least 10 g and at most 1 g. All weights in sampling must be measured and displayed to either two or three decimal places. 2.4.2 Completing the CN 53 form 46 Separate CN 53 forms are used for each mail category (RL 233 and 234) and format, and within a mail category and format separate forms are used for each day, each month or each quarter (depending on what period breakdown is chosen for the CN 53). For designated operators applying the alternative approach, a further CN 53 separation should be made by receptacle type. The operations require calibrated scales for weighing the items and receptacle. For weights up to 30 kg, the scales must have a resolution of at least 10 g and at most 1 g. All weights in sampling must be measured and displayed to either two or three decimal places. 47 For each receptacle that is sampled, the office will enter on the CN 53 the S9 receptacle identifier, the receptacle type, the number of items, the gross weight (i.e. weight of items plus tare), and the net weight (i.e. weight of items). 48 The instructions in the form completion instruction document (FCD) should be followed in order to complete the CN 53 form. The FCD is a technical guide to help complete a UPU form. This FCD is available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completioninstructions.html). 49 Once the statistical operations for the observation period are finished, the office of exchange sends its central service the CN 53 statements it has prepared, separated by mail category and format. It is recommended that e53 data files be used instead of paper CN 53 statements. Detailed instructions are given in the EDI Messaging Standards, M50-1, e53 Electronic statement of sampling.

31 2.5 Estimation overview 50 Estimation of items and IPK is done independently for each quarter, mail category and format, where applicable. Quarter refers either to the sampling date or to the dispatch date. Designated operators should indicate which option has been chosen. 51 For a specific quarter, mail category and, where applicable, format, the total number of items is estimated by: summing sample items and sample gross weight for all CN 53 forms for all observation days within that quarter, mail category and format; dividing the total sample items by total sample gross weight to obtain an estimated IPK for that quarter, mail category and format; multiplying the estimated IPK by the total dispatched weight for that quarter and mail category to develop an estimate of items for that quarter and mail category. 52 Designated operators with multiple offices of exchange may also wish to weight their estimates for a given quarter, mail category and format according to the dispatched weight received at each office of exchange for that quarter, mail category and format. 53 Designated operators applying the "alternative approach for statistical counts for exchanges of mail between countries in the target system" (RL 231) should also weight their estimates of IPK by receptacle type, if dispatch data is exchanged at this level. 54 The annual estimate of items is developed on the CN 54bis by multiplying the quarterly estimated IPKs shown on the CN 54 by the applicable dispatched weights for the related quarter (information on CN 56) and summing the quarterly estimate of items for the full year. The annual estimated IPK is the ratio of the annual estimate of items divided by the annual dispatched weight. 55 The CN 54bis displays information on mail separated by format separately for each format. Mail not separated by format is displayed in the section Mixed mail. The total weight and calculated number of items by format are further consolidated to obtain the annual estimated IPK as the ratio of the annual estimate of items across all formats divided by the annual dispatched weight. 2.5.1 Organization of CN 53 forms 56 The instructions on organization of CN 53 forms are in the form completion instruction document (FCD). The FCD is a technical guide to help complete a UPU form. This FCD is available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completion-instructions.html). 2.5.2 Completing the recapitulative statement of items (CN 54) 57 The instructions on how to complete a CN 54 form are in the form completion instruction document, available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completioninstructions.html). When a CN 53 form is sent electronically with the e53 message (see 49), it is not necessary to generate a CN 54 form. 58 When paper CN 53 forms are sent, they are not sent individually. Instead, a CN 54 is generated to summarize all sampling performed at operator level for a quarter, and all CN 53 forms for the quarter are attached. The CN 54 only displays quarterly sampling totals per mail category and format (or provides information in the section Mixed mail when mail is not separated by format), without displaying any calculation detail. The Post receiving a CN 54 is therefore invited to verify that the totals appearing on the CN 54 form correspond to the sum of sampling results appearing on the individual CN 53 forms for the period per sending office, mail category, month or quarter, format (if applicable) and receptacle type (if applicable). 59 The CN 54 template covers the special case when part of the mail is separated by format and part of the mail is not separated by format: lines P or S, G and E are completed for mail separated by format, and the line Mixed mail is completed for mail not separated by format. 60 The CN 54 recapitulative statement must be sent, together with the CN 53 forms, to the other designated operator concerned no later than three months after the dispatch or receipt of the last mail

32 included in the statistics for the target system sampling (RL 233.1.3) and no later than one month for the revision mechanism sampling (RL 234.1.4). 61 The CN 54 recapitulative statements are considered fully accepted unless comments are received from the corresponding designated operator within three months of receipt (RL 233.1.4 and RL 234.1.4). 2.5.3 Completing the annual recapitulative statement of items (CN 54bis) 62 The instructions on how to complete a CN 54bis form are in the form completion instruction document available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completioninstructions.html). Based on the accepted CN 54 statement and related accepted CN 55 or CN 56 statements, the country performing the statistical count calculates the annual IPKs using the CN 54bis annual recapitulative statement and, in the case of the revision mechanism, the new terminal dues rate (RL 233.2.1 and 234.2.2). 63 Within one month of the acceptance of the CN 56 for quarter 4, the creditor designated operator will prepare and send to the debtor designated operator the CN 54bis and CN 61. The CN 54bis will apply the accepted CN 54 IPK data to the accepted CN 55 or CN 56 weights, in order to calculate the overall number of items exchanged and, in the case of the revision mechanism, the new terminal dues rate (RL 233.2 and 234.2). 64 To calculate the overall IPK, the creditor designated operator or designated operator requesting the sample will enter on the CN 54bis the accepted CN 56 weights for the applicable quarter and the accepted IPK for the sample period. Multiplying the accepted weights and IPKs across each quarter provides the total number of items for the sample period. 65 The CN 54bis template covers both format-separated mails and mixed mails. 66 The CN 54bis annual statement should be sent within the required deadline of one month (RL 233.2.3) after the CN 54 and CN 56 for the fourth quarter have been accepted. Accepted CN 54 statements do not imply that the respective CN 54bis statements are automatically accepted as well; the sampling method can still be discussed and objections to results are still possible (systematic differences and defects in sampling may become apparent only after analyses over the whole year). CN 54bis statements are considered fully accepted unless comments are received within one month of transmission (RL 233.2.4). 2.5.4 Application of estimates for terminal dues purposes 67 For the target country system, the total number of items and the average IPK are entered directly on the CN 61. 68 For the revision mechanism, the overall IPK determined on the CN 54bis is used to establish a revised terminal dues per kilogramme rate using the formula: (IPK x rate per item in article 31.3 + rate per kg in article 31.3). This rate is then entered into the corresponding column of tables 2.1 and 2.2 on the CN 61. 69 Completed examples of the CN 53, CN 54, CN 54bis and CN 61 forms are given at the end of this chapter. 2.6 Notice of design decisions 70 Each country must notify the corresponding country of its design decisions, including its sampling and estimation approaches, at least two months in advance of the observation period. Nevertheless, the receiving country will not be required to notify the dispatching country in advance as to the observation days or mail receptacles that are chosen to be sampled (RL 231.4 and RL 232.3). 2.7 Statistical counts not performed 71 Where sampling for items per kilogramme has not been performed or has not been submitted within five months after the end of the fourth quarter, the other designated operator will have the right to submit its own sampling for the missing data. Own sampling data can also be included in case of insufficient sample size. The statistical sampling and estimation should conform to the principles set out in article RL 228, but with a target precision of ± 7.5% instead of ± 5%. If no data are available, the lower of the last agreed aver-

33 age number of items per kilogramme or the average number of items per kilogramme agreed for target country flows will be used (RL 229.5 and 231.5). 72 These rules apply both when statistical counts or alternative approaches are normally applied between designated operators.

34 Example 1: Set of forms with fictive contents illustrating sampling This example comprises the following completed forms: - CN 36 receptacle label for a receptacle of format P - CN 36 receptacle label for a receptacle of format G - CN 31 letter bill for the dispatch corresponding to the two receptacles above - CN 55 statement of mails for the quarter including the dispatch above - CN 56 recapitulative statement of mails for the same quarter - CN 53 statement of sampling for the same quarter - CN 54 recapitulative statement of sampling for the same quarter - CN 54bis annual recapitulative statement of sampling (2 pages) - CN 61 detailed account (2 pages)

35 JPTYOK (JPA) TOKYO INT VB 1 Japan Post BUN 82 2017-07-01 BG 3 FRCDGA (FRA) ROISSY CI LA POSTE, France G UN 15.0 JPTYOK FRCDGA BUN 7 0082 003 00 0150 01 NRT JL 0012 CDG CDG JPTYOK (JPA) TOKYO INT VB 1 Japan Post BUN 82 2017-07-01 BG 4 FRCDGA (FRA) ROISSY CI LA POSTE, France P F UN 9.4 JPTYOK FRCDGA BUN 7 0082 004 10 0094 01 NRT JL 0012 CDG CDG

36 JPA Japan Post FRA LA POSTE, France TOKYO INT VB 1 JPTYOK ROISSI CI FRCDGA S.A.L. B UN 7 0082 2017-07-01 NRT JL 0012 CDG 1 3 1 3 4 1 1 3 46.2 1 15.0 61.2 A. Postman

37 FRA LA POSTE, France 2017-10-21 JPA Japan Post JPTYOK TOKYO INT V BAG 1 FRA LA POSTE, France FRCDGA ROISSY COURRIER INTERNATIONAL B 2017 Q-3 07-01 UN 7 0082 46.2 15.0 07-03 UN 7 0083 59.9 40.1 38.4 07-04 UN 7 0084 45.0 35.1 41.7 2 6.7 07-05 UN 7 0085 42.4 45.1 12.5 07-06 UN 7 0086 62.5 50.4 07-07 UN 7 0087 79.7 83.4 50.1 9.7 07-08 UN 7 0088 88.0 50.4 60.9 07-10 UN 7 0089 61.1 41.8 66.6 07-12 UN 7 0090 57.1 31.1 52.4 1 4.2 07-13 UN 7 0091 48.5 51.7 3 9.0 07-15 UN 7 0092 108.5 75.0 87.4 07-16 UN 7 0093 36.2 38.9 45.0 07-17 UN 7 0094 72.5 18.6 07-19 UN 7 0095 90.0 45.4 30.2 9.1 07-20 UN 7 0096 81.2 68.1 50.3 1 5 FRA LA POSTE, France 2017-10-21 JPA Japan Post FRA LA POSTE, France B 2017 Q-3 JPKIXJ FRCDGA UN 1 813.5 2 001.3 1 555.5 JPKIXK FRCDGA UN 527.9 834.1 789.1 4 22.1 42.1 JPTYOJ FRCDGA UN 2 014.8 1 978.5 1 741.0 JPTYOK FRCDGA UN 1 150.0 1 164.2 890.1 8 44.2 84.2 5 506.2 5 978.1 4 975.7 3 17.4 116.3 A. Postman 1 1

38 FRA LA POSTE, France X 2017-07 2017-08-15 X X JPA Japan Post FRA LA POSTE, France TOKYO INT V BAG 1 JPTYOK ROISSY CI FRCDGA S.A.L. B Small P 03 JPTYOK FRCDGA B UN 7 0081 001 00 0153 IL 131 9.3 04 JPTYOK FRCDGA B UN 7 0082 004 11 0094 BG 145 12.5 05 JPTYOK FRCDGA B UN 7 0083 002 00 0180 IL 148 11.9 05 JPTYOK FRCDGA B UN 7 0083 010 11 0089 BG 258 15.2 10 JPTYOK FRCDGA B UN 7 0086 002 00 0155 IL 70 13.3 14 JPTYOK FRCDGA B UN 7 0089 001 00 0170 IL 136 12.1 17 JPTYOK FRCDGA B UN 7 0091 001 00 0182 IL 259 15.2 19 JPTYOK FRCDGA B UN 7 0093 001 00 0146 IL 169 11.5 21 JPTYOK FRCDGA B UN 7 0095 002 00 0111 IL 125 11.1 24 JPTYOK FRCDGA B UN 7 0096 002 11 0079 BG 101 7.9 24 JPTYOK FRCDGA B UN 7 0097 002 00 0155 IL 238 15.5 28 JPTYOK FRCDGA B UN 7 0100 001 00 0170 IL 203 16.0 31 JPTYOK FRCDGA B UN 7 0103 001 00 0193 IL 121 9.9 2 104 161.4 752 2 215.3 13 A. Postman 1 1

39 2017-10-21 FRA LA POSTE, France X JPA Japan Post FRA LA POSTE, France 2017 Q-3 974.100 18 125 18.6069 681.900 15 013 22.0164 210.700 3 120 14.8078 331.200 3 531 10.6612 291.500 4 010 13.7564 315.000 3 151 10.0032 473.400 2 518 5.3190 466.400 3 154 6.7624 514.500 2 989 5.8095 A. Postman

40 FRA LA POSTE, France 2018-02-15 X JPA Japan Post FRA LA POSTE, France 2017 8 585.0 18.3650 157 664 6 118.1 19.3524 118 400 847.3 15.0255 12 731 8 478.5 18.8302 159 652 6 397.1 24.7244 158 164 762.6 15.9806 12 187 9 391.6 18.6069 174 749 5 506.2 22.0164 121 227 932.0 14.8078 13 801 13 251.0 17.8440 236 451 9 720.6 20.2111 196 464 1 419.2 13.5639 19 250 39 706.1 18.3477 728 516 27 742.0 21.4208 594 255 3 961.1 14.6346 57 969 6 098.3 11.7273 71 517 5 983.3 12.5183 74 901 721.6 8.9629 6 468 5 956.0 11.1943 66 673 5 262.9 12.3780 65 144 656.7 9.6331 6 326 6 241.6 10.6612 66 543 5 978.1 13.7564 82 237 810.4 10.0032 8 107 8 884.6 10.6505 94 625 8 966.6 14.3067 128 282 1 180.5 10.1332 11 962 27 180.5 11.0137 299 358 26 190.9 13.3850 350 564 3 369.2 9.7539 32 863 2 034.2 4.7461 9 655 4 105.8 5.7210 23 489 3 974.0 6.1987 24 634 2 009.0 5.2499 10 547 4 695.0 7.4386 34 924 3 616.3 5.2053 18 824 2 100.6 5.3190 11 173 4 975.7 6.7624 33 648 4 158.7 5.8095 24 160 3 293.5 5.4413 17 921 6 716.7 6.7692 45 467 6 861.9 4.4443 30 496 9 437.3 5.2235 49 296 20 493.2 6.7109 137 528 18 610.9 5.2719 98 114 71 409.2 1 380 740 19.3356 56 740.6 682 785 12.0334 48 541.4 284 938 5.8700 116.8 665 241.6 2 377 285.2 2 342 502.2 3 572 1 145.8 8 956 1 145.8 8 956 A. Postman

41 FRA LA POSTE, France 2018-08-16 X JPA Japan Post 2017 8 585.0 6 098.3 2 034.2 116.8 160.2 1 377 189 6 118.1 5 983.3 4 105.8 121.1 847.3 721.6 3 974.0 8 478.5 5 956.0 2 009.0 241.6 176.2 1 597 221 6 397.1 5 262.9 4 695.0 105.7 762.6 656.7 3 616.3 9 391.6 6 241.6 2 100.6 285.2 193.8 1 853 259 5 506.2 5 978.1 4 975.7 116.3 932.0 810.4 4 158.7 13 251.0 8 884.6 3 293.5 502.2 368.2 3 335 492 9 720.6 8 966.6 6 716.7 220.9 1 419.2 1 180.5 6 861.9 46 507.2 212.3 71 409.2 56 740.6 46 294.9 1 145.8 1 462.4 8 162 1 161 6 315.7 3 646.8 1 602.6 130.6 137.3 568 157 4 421.0 2 735.1 1 089.8 82.4 6 947.3 4 376.2 1 843.0 156.7 151.0 659 184 4 863.1 3 282.2 1 253.2 90.6 7 642.0 5 251.4 2 119.5 188.0 166.1 764 215 5 349.4 3 938.6 1 441.3 99.7 12 227.2 8 927.4 3 179.3 357.2 315.6 1 375 409 8 559.0 6 695.6 2 161.9 210.7 86.0 14 690.6 245.0 56 324.7 38 853.3 14 445.6 1 043.2 1 128.7 3 366 965

42 71 409.2 2.245 160 314 23.1237 1651 245 0.135 222 918 56 740.6 2.245 127 383 12.4283 705 189 0.135 95 201 46 294.9 2.245 103 932 5.0062 231 762 0.135 31 288 1 145.8 2.245 2 572 8 956 0.135 1 209 1 462.4 0.885 1 294 8 162 0.670 5 469 1 161 1.342 1 558 395 495 357 643 56 324.7 2.250 126 731 22.0246 1240 529 0.150 186 079 38 853.3 2.250 87 420 11.3278 440 122 0.150 66 018 14 445.6 2.250 32 503 4.7807 69 060 0.150 10 359 1 043.2 2.250 2 347 6 210 0.150 932 1 128.7 0.885 999 3 366 0.670 2 255 965 1.342 1 295 250 000 266 938 395 495 357 643 753 138 250 000 266 938 516 938 236 200 A. Postman

43 Chapter III Terminal dues system operations and accounting 1 Operations concerning registration of weight and number of ordinary mail and registered and insured items subject to terminal dues 1 As described in chapter I, from 1 January 2014 format separation became mandatory for groups 1.1, 1.2 and 2 above certain thresholds. 2 The obligation of exchanging format-separated mail should be implemented in accordance with article RL 175: At the origin, the flows that are above the threshold are expected to be sent in format-separated dispatches. For the application of the threshold the volumes of the previous year will be used. The four most recent quarterly statements of weights should be used as the best indication of mail volumes for the following year. The practical details (fulfilment of conditions/threshold, start date, etc.) should be the subject of a mutual agreement between the designated operators concerned. Designated operators shall send the designated operators concerned the request for receiving or the notification for sending format-separated mails by 30 September for application on 1 January of the following year and subsequent years. Designated operators allowed to separate mail into two formats (S and E) or three formats (P, G and E), as provided for in 3 below, are not allowed to switch from one format-separation option to the other with a partner designated operator in the same calendar year. If they wish to change from two to three formats or from three to two, they shall inform the designated operator concerned by 30 September, for application on 1 January of the following year. The discontinuation of the making up of format-separated mails shall be notified by 30 November and shall take effect on 1 January of the following year and subsequent years. In case of receipt of mixed dispatches in a relation where the conditions are met or the agreement for format-separated exchanges was made, the designated operator of destination shall be entitled to segregate and sample the received mails by format or receptacle type, for sampling, calculation of IPKs and accounting of TDs by format. It may be mutually agreed that, in relations above the threshold, where there are low daily mail volumes from a specific exchange office, these may be made up in mixed dispatches. Daily mail volumes of no more than two tonnes per year from a sending office of exchange to a receiving office of exchange would be considered low. However, these dispatches will also be subject to format sampling by the destination DO. For operational, statistical and accounting purposes, registered, insured and express items shall be treated as bulky letters (E) regardless of their actual shape. 3 The labels for receptacles shall also reflect information regarding the contents of the receptacle, such as codes from UPU code lists 120 (format of contents) and 188 (special content codes). Trays must reflect "P" or "G" (RL 188). Receptacles containing items of format P and G combined should be coded as "S". 1.1 Operations at the office of exchange of origin CN 31 letter bill 4 The instructions for CN 31 forms are in the form completion instruction document (FCD). The FCD is a technical guide to help complete a UPU form. This FCD is available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completion-instructions.html). For each mail, the office of exchange must complete a CN 31 letter bill, which is the basic document for determining the annual weight of mail subject to terminal dues. A CN 31 letter bill shall accompany each dispatch, except for bulk mail dispatches and dispatches intended for direct access mails (RL 179.1). 1.1.1 Entry of weight

44 5 The data necessary for establishing terminal dues and transit charges are given in table 2 of the CN 31 letter bill. This table is divided into four parts: a b c d Number and weights of priority/non-priority or LC/AO bags and other receptacles, partly consisting of five fields intended for the gross weights of the bags/other receptacles: number and weights of receptacles containing small letters (P) or small and large letters (P/G) subject to terminal dues; number and weights of receptacles containing large letters (G) subject to terminal dues; number and weights of receptacles containing bulky letters (E) subject to terminal dues; number and weights of receptacles containing mixed letters (X) subject to terminal dues; number and weights of receptacles containing letter post items exempt from terminal dues. The weights to be entered are the sums of the weights given on the CN 34, CN 35 or CN 36 labels, with the exception of M bags. The weights subject to transit charges and terminal dues include the weight of IBRS included in the dispatch. Data on dispatches of empty receptacles, which are exempt from terminal dues but not from transit charges: the weight is given according to the rules mentioned under a. Data on M bags: the weight of the M bags is given separately for bags up to five kilogrammes and for bags of over five kilogrammes, according to the rules mentioned under a. The number of M bags weighing less than five kilogrammes is also given. Total weight of the mail: this is the sum of the weights of all the bags/receptacles making up the mail. 1.1.2 Use of sacs collecteurs 6 The use of sacs collecteurs for sending M bags weighing less than 5 kilogrammes (RL 178.5.2) does not change the way of entering the number and the weight of the M bags. Thus, the number and the weight of the M bags contained in the sacs collecteurs are given in tables 1 ("M bags" part) and 2 ("M bags up to 5 kg" part) of the letter bill. 1.1.3 Registered, insured and express items 7 The numbers of registered, insured and express items subject to terminal dues are to be entered in the second-last column of table 3. Registered items should be entered individually on a CN 33 special list. Insured items should be entered individually on a CN 16 special list. 8 Designated operators dispatching more than 100,000 registered or express items per year to a destination designated operator must dispatch all of their registered or express items under a mail dispatch series exclusively for registered or express items, i.e. by dispatch mail subclass UR for registered items and dispatch mail subclass code UX for express letter-post items (RL 180.2; RL 183.2). 9 If registered, insured and/or express items are returned to origin as undeliverable, under the conditions provided for in article RL 215.3, they should be entered in the last column of table 3 to ensure that they are exempted from additional terminal dues for delivery of registered and/or insured items. 10 If registered items "on postal service" are included in the mail, their number should be entered in the last column of table 3 to ensure that they are exempted from additional terminal dues. 1.1.4 Filing of CN 31 11 When CN 31 forms are completed manually, it is recommended that designated operators of origin file copies of CN 31 letter bills according to each annual series, either at the office of exchange or at the central service, in order to facilitate checking of the statements prepared by the designated operator of destination. 12 At the end of this chapter, you will find a properly completed example of the top part of the CN 31 letter bill and of the CN 35 label.

45 1.2 Procedures for returning empty bags 13 The term "empty bags" is intended to mean receptacles of any kind used and owned by designated postal operators for the carriage of mail. 14 The owning designated operator has the right to choose the route and the carrier for the return of the bags. It can also stipulate details such as the timing, frequency and office of return for its empty bags. It should seek bilateral rate and operational agreements with a given carrier or carriers and inform sending designated operators and carriers about operational details. 15 Empty bags should in principle be returned to one office of exchange as stipulated in article RL 203.5 of the Letter Post Regulations, and as communicated by each designated operator via the UPU Compendium of Letter Post Services. 16 A new heading labelled "Designated operator to which receptacles belong" has been created on the CN 47 delivery bill for mails of empty bags. The returning (i.e. non-owning) designated operator will indicate the designated operator owning the bags, and airlines transporting the bags will bill the owning designated operator on this basis. 17 Bags returned by air will always be sent in separate dispatches and accompanied by the CN 47 and CN 31. The airlines and designated operators concerned should mutually agree upon any other procedure. 18 Carriers will bill owning designated operators for the carriage of empty bags by listing the dates, serial dispatch numbers and the designated operator of origin of the CN 47s to which each invoice refers so that owning designated operators can account for their equipment. 19 Once the returning (non-owning) designated operator hands over a mail of empty bags to a carrier, the mail should, where possible, be handled by the same carrier until it reaches the owning designated operator. When this mail passes through any intermediate airport, direct inter- or intra-carrier transhipment will, in principle, take place. As such, no transit designated operator will normally be involved in the process of returning empty bags. Financial settlements will, therefore, usually be limited to bills sent by the participating carrier(s) to the owning designated operator. 20 The owning designated operator will normally have an agreement with carriers used for the return of its bags. In cases where there is no prior agreement and empty bags are carried by a non-contracted airline as per instructions on the CN 47 issued by the sending designated operator, the non-contracted carrier will bill the owning designated operator at the applicable carrier's rate. However, this rate will not exceed 30% of the applicable UPU basic airmail conveyance rate. 21 If a transit designated operator is involved in handling an empty bag dispatch it will be entitled to claim transit charges from the owning designated operator. The designated operator of transit will prepare the CN 69 statement of closed transit mail based on the receptacles of empty bags handled in transit. 1.3 Operations at the office of exchange of destination 22 The office of exchange of destination checks, by sampling or systematically, the number of bags and the weight entered on the bag labels. The data given by the office of origin are accepted as valid if they differ: a b by 200 grammes or less in the case of bags of surface/s.a.l. mails or non-priority mails; by 100 grammes or less in the case of bags of airmails, priority mails or bulk mail; c by 100 grammes or less or 20 items or fewer in the case of IBRS items (RL 197.2).

46 1.3.1 CN 43 verification note 23 If data do not match those entered on the letter bill, the office of exchange of destination immediately reports the irregularities established to the office of exchange of origin by means of a CN 43 verification note (RL 197.3). The instructions for CN 43 forms are in the form completion instruction document (FCD). The FCD is a technical guide to help complete a UPU form. This FCD is available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/form-completion-instructions.html). 24 If the office of exchange of destination observes that there are registered, insured and/or express items not carrying the UPU S10-compliant barcode identifier, it may establish a CN 43 verification note indicating in section 5 (other irregularities) the number of non-compliant items. On the basis of this note the destination DO may claim the additional payment of 0.5 SDR per item provided for in article 29.9. 25 Using the CN 61 detailed account the destination DO may: add 0.5 SDR to the rates (article 29.8) provided for in section 2.1 of the CN 61 for registered and insured items if none of the items sent by the corresponding origin DO are compliant; issue an additional CN 61 detailed account for those registered and insured items that are not compliant. It is recommended that this separate account contain only the additional payment of 0.5 SDR per item, the basic payment being charged through the regular CN 61. 1.3.2 CN 55 quarterly statement 26 As soon as possible after receipt of each quarter s last mail dispatched by the office of exchange of origin, the office of exchange of destination prepares, by type of mail and by format (where appropriate), a CN 55 statement of mails received that are subject to terminal dues. The CN 55 is prepared from the particulars on the CN 31 letter bills, including bulk mail and the number of registered and insured items. Mail or items exempted from terminal dues are not included in the data entered on the CN 55. 27 If several forwarding routes are used between the two offices, separate statements are prepared for each route to allow them to be used by the designated operators of transit as well (RL 235.2). 28 Where airmails are concerned, the statement of mails is prepared on form CN 55, which may also be used for the settlement of air conveyance dues within the country of destination The CN 55 forms prepared can therefore serve two purposes, provided that the terminal dues rates charged by the country of destination to origin are not based on cost or domestic rates (Convention article 34.6). 29 The CN 55 statement provides three columns for M bags. Column Weight of bags up to 5 kg is provided for information only and is not used for terminal dues calculations (for these calculations, performed on the CN 56, the number of M bags up to 5 kg is used, and these M bags are charged as if their weight were 5 kg). 30 The office of exchange that prepares the CN 55 quarterly statements of mails received sends them to the central service of its designated operator. 31 At the end of this chapter, you will find an example of a properly completed CN 55 statement. 1.4 Operations at the central service of the designated operator of destination 1.4.1 CN 56 quarterly statement 32 On the basis of the CN 55 quarterly statements of mails received per own office and partner office, the relevant central service of the designated operator of destination prepares quarterly CN 56 statements of mails (RL 235.2) covering all offices. The particulars of each CN 55 quarterly statement take up one line on the CN 56 statement.

1.4.2 Transmission of CN 56 statements to the designated operator of origin 47 33 The CN 56 statements, as appropriate, are sent in duplicate to the designated operators of origin of the mails as soon as possible, and not later than four months after the end of the quarter to which they relate (RL 236.1). The CN 56 forms must be accompanied by the relevant CN 55 quarterly statements (RL 235.3). 1.4.3 Operations performed by the designated operator of origin of the mails. Supporting documents in the event of a dispute 34 After acceptance of the CN 56 forms, as appropriate, the designated operator of origin of the mails returns one copy. If the designated operator that prepared the forms has not received any notice of amendment within two months of the date of dispatch, they are regarded as fully accepted. However, if the designated operator of origin disputes the data entered on the CN 56 forms, it corrects them before accepting them. It attaches the corrected CN 55 forms in support of the duly amended CN 56 forms. If the designated operator of destination disputes these amendments, the designated operator of origin confirms them by sending photocopies of the CN 31 forms drawn up by the office of origin upon dispatch of the disputed mails (RL 236.2). 35 Designated operators may agree that the CN 55 and CN 56 forms are to be prepared by the designated operator of origin of the mails, with corresponding reversal of the acceptance procedures (RL 236.3). 36 At the end of this chapter, you will find an example of a properly completed CN 56 statement. 2 Operations concerning bulk mail 2.1 Operations at the office of exchange of origin 37 If the designated operator of origin has opted to make up separate dispatches of bulk mails, each bulk mail must be accompanied by a CN 32 letter bill (RL 186.1). The instructions for CN 32 forms are in the form completion instruction document (FCD). The FCD is a technical guide to help complete a UPU form. This FCD is available on the UPU website (www.upu.int/en/resources/documentation-centre/forms/formcompletion-instructions.html). 38 The number and weight of the bags making up the bulk mail and the number of items it contains are indicated in table 1 of the CN 32 form (RL 186.2). These figures represent the sums of the data indicated on the CN 34, CN 35 or CN 36 labels. 39 If designated operators have so agreed, the designated operator of origin may indicate the number and weight of items according to their format (RL 186.2.1). In this case, the designated operators concerned agree on how the CN 32 form is to be filled out. 40 Depending on the forwarding method to be used, the bags of bulk mails must bear a violet CN 34, CN 35 or CN 36 label when they contain only ordinary items (RL 188.8). If, however, they contain the letter bill or registered items, the bags of bulk mails must bear a red CN 34, CN 35 or CN 36 label (RL 188.3). The weight of the bag and the number of items it contains must be mentioned on the label. 41 In the case of bulk mails, no bag is exempt from terminal dues. 2.2 Operations at the office of exchange of destination 42 If the office of origin has opted to make up its bulk mail in separate dispatches, the office of exchange of destination checks, by sampling or systematically, the weight and number of items entered on the bag labels. The data given by the office of origin are accepted as valid if they differ by 100 g or less from the weights established (RL 197.2.2). 43 The office of exchange of destination then checks whether the details about the weight and number of items correspond to those entered on the CN 32 letter bill. If not, it immediately reports the irregularities

48 noted to the office of exchange of origin by means of a CN 43 verification note. The observations made are entered in part 3 of the form. 44 A CN 43 verification note is sent to the designated operator of origin, accompanied by a replacement letter bill that includes the details of the bulk items received in the following cases (RL 197.6.1.1 to 6.1.3): a b c the designated operator of origin has opted to make up bulk mails separately and sends bulk items in other mails; the bulk mails are not accompanied by a CN 32 letter bill; the designated operator of destination is either: applying bulk mail provisions with immediate effect to dispatches of 3,000 or more items; or has announced its intention to apply bulk mail provisions to dispatches of 1,500 or more items at least three months earlier. 45 In these cases, the CN 31 letter bill of the mail containing the bulk items must be corrected accordingly by subtracting the weight of the bulk mail. A copy of the corrected CN 31 letter bill accompanies the CN 43 verification note (RL 197.6.2). This procedure is necessary to avoid the double billing of terminal dues for bulk mail. 2.3 Accounting for bulk mail 46 If the designated operator of destination has requested payment specific to bulk mail, the designated operator of origin may send bulk items in specific mails, accompanied by the CN 32 letter bill. The data regarding bulk mail shall be used for the quarterly preparation of the CN 56 recapitulative statement. In cases where the data concerning bulk mail on the CN 55 statement differ, the designated operator of origin shall transmit photocopies of the CN 32 letter bills regarding the disputed mails. 47 The designated operator of destination shall report all bulk mail received in a CN 57 quarterly account on the basis of the data on the CN 32 letter bill. 48 In case of dispute, the designated operator of origin shall transmit copies of the CN 32 letter bills regarding the disputed mails to the designated operator of destination, or give access to the corresponding electronic data, if the CN 32 was exchanged electronically. 49 The designated operator of origin may refuse to check and accept any CN 57 account which has not been presented within four months after the quarter concerned. 50 The CN 57 account shall be accepted and settled by the designated operator of origin within two months after it is prepared. 3 Accounting for terminal dues 3.1 CN 61 detailed account 51 As soon as all the CN 56 statements and, where appropriate, the CN 54 statements for settlements involving statistical results relating to the year concerned have been accepted, the creditor designated operator prepares the CN 61 detailed account from the CN 56 forms. In the heading "Amount to be received", decimals are ignored (RL 254.3). Except when a provisional payment has been made for terminal dues or amounts are carried over from a previous period, the CN 61 may only serve as the basis of payment; the method of settlement will be indicated on this form by the creditor designated operator (RL 241.1). If the balance of a CN 61 account does not exceed 326.70 SDR, it shall be carried over to the next CN 64 account, unless the designated operators concerned participate in the clearing system of the International Bureau (RL 241.8). 3.1.1 Possibility of preparing separate accounts for surface mail and airmail

49 52 Designated operators may agree to settle terminal dues accounts for surface mails and for airmails separately. In that case, the designated operators concerned determine the procedures for preparing, accepting and settling the accounts (RL 239.8). 3.1.2 Supplementary CN 61 53 As an exceptional measure, supplementary detailed accounts may be sent to the debtor designated operator only if they complement accounts already submitted for the year in question. The time limits of 10 months from the end of the year concerned for dispatch of these accounts and two months for their acceptance also apply to supplementary detailed accounts (RL 239.6). 3.2 Time limit for submission of CN 61 54 The debtor designated operator will not be obliged to accept CN 61 detailed accounts that are not sent to it within 10 months of the end of the year concerned (RL 239.5). Appendix C provides the timeline of terminal dues forms. 55 At the end of this chapter, you will find an example of a properly completed CN 61 detailed account. 3.3 Time limit for acceptance of CN 61 56 The debtor designated operator must approve and return the CN 61 detailed account within two months of the date of dispatch of the account. If no notice of amendment is received within that time, the creditor designated operator regards the account as fully accepted (RL 239.6). Furthermore, discrepancies are disregarded unless they exceed a total of 9.80 SDR per account (RL 254.3). 4 Settlement of terminal dues accounts 4.1 CN 64 statement 57 If provisional payment has been made for terminal dues and the CN 64 is being used for final settlement, as soon as the CN 61 (terminal dues) detailed account is accepted or regarded as fully accepted, the creditor designated operator prepares and sends to the debtor designated operator the CN 64 statement (RL 241.2). When the CN 64 statement is being prepared, account is taken of any provisional payments made. 58 At the end of this chapter, you will find an example of a properly completed CN 64 statement. 4.2 Time limit for acceptance of CN 64 59 If the creditor designated operator has received no objection from the debtor designated operator within one month of the date of dispatch or electronic transfer of the CN 64 statement, the statement is regarded as fully accepted (RL 241.3 and 253.2). 4.2.1 Methods of payment 60 The amounts due under the CN 64 statement may be settled either directly between the two designated operators concerned (by general statement or direct payment) or, if they are both members of the system, through the provisions of UPU*Clearing, the International Bureau's account clearing system (RL 254.4, 255.1).

50 5 Provisional payments of terminal dues 5.1 When and on what basis a provisional payment may be requested 61 The CN 64 statement concerning the provisional payments laid down in RL 242.1 shall be sent by the creditor designated operator to the debtor designated operator in the second calendar quarter of the year to which it relates (RL 242.2). 62 This provisional account is based on the weight and statistical results (when applicable) of mail used for the final settlement of the preceding year. 63 If these weights have not yet been established, the provisional payments are calculated on the basis of the CN 56 recapitulative statements duly accepted for the last four quarters. If statistical results have not been established, the provisional payments are based on the results of the most recent available year. The terminal dues rates published for the year of payment should be used to calculate the SDR amount of the provisional payment. 64 Provisional payment on this basis must be made no later than the end of July of the year in question (RL 242.1). The forms and procedures involved are the same as those for final settlement. 65 If a creditor designated operator is in a "net debtor" position in relation to other accounts accepted between two designated operators, the debtor designated operator may offset outstanding accepted debts against the provisional payment. If the outstanding debt is greater than the requested provisional payment, the debtor designated operator will not be required to make the provisional terminal dues payment for that year. The creditor designated operator may also request that the debtor designated operator apply the provisional payment to outstanding debts between the two designated operators (RL 242.3). 5.2 Exchange rate to be applied 66 In the case of provisional payments involving currencies for which the SDR exchange rate is published by the International Monetary Fund, the rate in force on 30 June of that year or on the next working day, if 30 June is a holiday, is used. In the case of other currencies, the conversion into an intermediate currency is made at the last rate published in June of that year (RL 257.3.3). 6 Quality of Service Fund accounting 6.1 Regular billing 67 Contributions to the Fund are based on the amounts billed to the designated operator contributing to the Quality of Service Fund by the designated operator benefiting from the Fund, as reported on CN 64 statements or CN 61 detailed accounts, as appropriate (RL 243.1). The Quality of Service Fund billing comprises an SDR amount subject to increases specified in article 32 of the Convention over the terminal dues paid to the benefiting designated operator at the rates provided for in Convention article 31.3 and 4. 68 The weight of M bags and bulk mail will be excluded from this calculation. 69 An accepted CN 64 or, as appropriate, an accepted CN 61 will serve as the basic billing document. For flows between a designated operator contributing to the Fund and a designated operator benefiting from the Fund, the benefiting designated operator will send a copy of the CN 64 or CN 61 to the International Bureau, which is responsible for billing the amounts due to the Fund (RL 241.5). 70 The International Bureau will prepare a CN 64bis form for each contributing debtor country listing details of each benefiting creditor country, the amount in SDR subject to increases specified in article 32 of the Convention (from the CN 64 or CN 61), the total amount to be paid by the designated operator. It will also list the due date of the bill and bank payment details.

51 71 Once an annual CN 61 form for terminal dues has been accepted, the benefiting country will prepare a CN 64 form showing only the weight of mail to which the terminal dues rates provided for in Convention article 31.3 and 4 are applicable. The CN 64 will be sent to the contributing country. 72 The contributing country will have one month from the date of dispatch of the form to accept or dispute the amount. If no objection has been received within the time frame, the account will be regarded as fully accepted. 73 Upon receipt of the accepted CN 61/64 forms, the designated operator of the benefiting country will send a copy to the International Bureau, which will prepare a CN 64bis form for each contributing country. 74 The International Bureau is not required to accept CN 61/64 forms received more than one year after their acceptance. In the event of failure to comply with the deadline for transmitting CN 61/64 forms, that country will forfeit the right to the QSF funds with the contributing country concerned, for the year in question (RL 241.5.2). 75 Each contributing country will have one month from the date of dispatch of the CN 64bis to reject/ accept the amount. 76 Payment will be based on the difference between this final account less any "expedited billing" payments made for the same annual account. 6.2 Time limit for payment 77 The contributing country will have six weeks from the date of dispatch of the final accepted account in which to make payment. After that period, the amounts due will be chargeable with interest at the rate of 6% per annum reckoned from the day following the day of expiry of the six-week period (RL 257.10).

52 Example 2: Set of forms with fictive contents illustrating terminal dues, without format separation This example comprises the following completed forms: - CN 35 receptacle label - CN 31 letter bill for the dispatch corresponding to the receptacle above - CN 55 statement of mails for the quarter including the dispatch above (2 pages) - CN 56 recapitulative statement of mails for the same quarter - CN 61 detailed account (2 pages) - CN 64 statement, provisional - CN 64 statement, final BDDACA (BDA) DHAKA APT BangladeshPO AUN 12 2017-02-09 BG 2 TZDARA (TZA) DARES SALAAM Tanzania PC UN 8.2 BDDACA TZDARA AUN 7 0012 002 00 0082 10 DAC EK 0585 DXB 10 DXB EK 0725 DAR DAR

53 BDA Bangladesh Post Office TZA Tanzania Postal Corporation DHAKA APT BDDACA DAR ES SALAAM TZDARA Priority air A UN 7 0012 2017-02-09 DAC EK 0585 DXB, DXB EK 0725 DAR 1 2 3 3 3 3 3 36.2 36.2 1 1 12 12 A. Postman

54 TZA Tanzania Postal Corporation 2017-05-21 BDA Bangladesh Post Office BDDACA DAKHA AIRPORT SORTING OFFICE TZA Tanzania Postal Corporation TZDARA DAR ES SALAAM A 2017 Q-1 01-02 UN 7 0001 17.5 31 01-05 UN 7 0002 16.0 1 3.2 4 01-09 UN 7 0003 8.9 01-12 UN 7 0004 12.4 16 5 01-16 UN 7 0005 22.5 01-19 UN 7 0006 9.7 8.3 9 01-23 UN 7 0007 18.0 17 8 01-26 UN 7 0008 31.1 01-30 UN 7 0009 37.1 1 4.1 14 01 (Jan) subtotal UN (173.2) (2) (7.3) (8.3) (91) (13) 02-02 UN 7 0010 28.5 31 02-06 UN 7 0011 02-09 UN 7 0012 18.5 9.1 43 12 36.2 12 VN #53 (resolved) 02-13 UN 7 0013 32.8 02-16 UN 7 0014 10.0 1 2 TZA Tanzania Postal Corporation 2017-05-21 BDA Bangladesh Post Office BDDACA DAKHA AIRPORT SORTING OFFICE TZA Tanzania Postal Corporation TZDARA DAR ES SALAAM A 2017 Q-1 02-20 UN 7 0015 8.5 14 02-23 UN 7 0016 18.5 31 12 VN #78 (resolved) 02-27 UN 7 0017 26.4 02 (Feb) subtotal UN (179.4) (9.1) (131) (24) 03-02 UN 7 0018 10.6 03-06 UN 7 0019 28.2 19 03-09 UN 7 0020 11.7 03-13 UN 7 0021 38.2 27 11 03-16 UN 7 0022 20.0 03-20 UN 7 0023 14.3 03-23 UN 7 0024 40.6 1 4.4 25 6 03-27 UN 7 0025 11.7 9 03 (Mar) subtotal UN (175.3) (1) (4.4) (80) (17) Total UN 527.9 3 11.7 17.4 302 54 2 2

55 TZA Tanzania Postal Corporation 2017-05-21 BDA Bangladesh Post Office TZA Tanzania Postal Corporation A 2017 Q-1 BDDACA TZARKA UN 134.7 22 BDDACA TZDARA UN 527.9 3 17.4 32.4 302 54 662.6 324 54 3 17.4 32.4 324 54 A. Postman 1 1

56 TZA Tanzania Postal Corporation 2018-08-16 X BDA Bangladesh Post Office 2017 662.6 32.4 324 54 318.7 12.4 797.1 35.6 376 63 291.6 16.7 796.1 39.2 436 74 349.0 21.4 1 159.7 74.5 785 141 546.0 30.0 4 920.8 4 920.8 262.2 1 921 332 432.4 27.9 118 57 302.7 16.7 475.6 30.7 137 67 332.9 18.4 523.2 33.8 159 78 366.2 20.3 837.1 64.2 286 148 586.0 16.0 3 856.1 228.0 700 350

57 4 920.8 4.432 21 809 262.2 0.885 232 1 921 0.670 1 287 332 1.170 388 22 041 1 675 3 856.1 4.432 17 090 228.0 0.885 202 700 0.670 469 350 1.170 410 17 292 879 22 041 1 675 23 716 17 292 879 18 171 5 545 A. Postman

58 TZA Tanzania Postal Corporation 2017-07-14 X X 2017 TZA Tanzania Postal Corporation BDA Bangladesh Post Office 2 500 2 500 2 500

59 TZA Tanzania Postal Corporation 2018-08-16 X X 2017 TZA Tanzania Postal Corporation BDA Bangladesh Post Office 5 545 2 500 5 545 2 500 2 045

60 Chapter IV Transit operations and accounting 1 Registration of the weight of mail subject to closed transit charges and of empty receptacles 1.1 Operations at the office of exchange of origin 1.1.1 Entry of weight on CN 37, CN 38 and CN 41 delivery bills 1 The office of exchange of origin or another service of the designated operator of origin enters the sum of the weights given on the CN 34, CN 35 or CN 36 bag labels on a delivery bill. The delivery bill is form CN 37 for both the priority surface mails (the word "PRIOR" is indicated in the "Observations" column) and also for the non-priority surface mails, CN 41 for S.A.L. mails and CN 38 for airmails. The delivery bill may also include parcel mails. The delivery bill serves several purposes: verification on arrival that all the mail is received; source of data for payment of the carrier; source of data for transit charges accounting. 2 Pursuant to RL 215.3, items exempted from terminal dues (letter-post items relating to the postal service and IBRS items) are not exempted from transit charges. 3 At the end of this chapter, you will find an example of a properly completed CN 37 delivery bill (the CN 38 and CN 41 delivery bills should be used in an identical way). 1.2 Operations at the office of exchange of transit 1.2.1 Checking of individual receptacle weights 4 The intermediate office of exchange checks, by sampling or systematically, the weight entered on the receptacle labels. The data given by the office of origin is accepted as valid if it differs: by 200 g or less in the case of receptacles of surface mails or S.A.L. mails (RL 197.2.1); by 100 g or less in the case of receptacles of airmails, priority mails or bulk mails (RL 197.2.2); by 100 g or less in the case of IBRS (RL 197.2.3). 1.2.2 Checking of total weight of mail CN 43 verification note 5 The intermediate office of exchange then checks whether the sum of the weights of receptacles, corrected if necessary, matches the weight entered on the delivery bill. If it does not, it immediately reports the irregularities established to the office of exchange of origin by means of a CN 43 verification note (RL 197.3). The findings made are entered in part 2 of the form. 1.2.3 CN 69 statements of transit mail 6 The designated operator of transit shall prepare a CN 69, by origin and destination office of exchange and type of mail, based on its own record of the receptacles that it forwards as closed transit and in accordance with the particulars contained in the CN 37 delivery bills that it prepares, during the quarter (RL 235.4). 7 When the designated operator concerned prepares the CN 69 statement, the weight of the bags of letter post, comprising M bags and bags of priority/non-priority or LC/AO items, is indicated in column 6 of the CN 69 statement. The CN 69 statement may also include parcel dispatches.

61 8 At the end of this chapter, you will find an example of a properly completed CN 69 statement prepared by the designated operator of transit from the CN 37 delivery bills. 9 The CN 69 statements of closed transit mail shall be sent in duplicate to the origin designated operator within four months at the latest after the end of the quarter to which they relate (RL 236.3bis). 10 After accepting a CN 69 statement, the designated operator of origin shall return one copy to the designated operator which prepared it. If the designated operator which prepared it has not received any notice of amendment within two months of the date of dispatch of the CN 69 form, it shall regard it as fully accepted. The term fully accepted means accepted as rendered, with no changes or amendments. 2 Determination of the weight of empty receptacles 11 The designated operator of transit or destination may require that empty receptacles be returned in separate dispatches (RL 203.4). They should then be documented on the CN 47 delivery bill and CN 31 letter bill. 12 On receiving dispatches of empty receptacles accompanied by a CN 47 delivery bill, the transit designated operator will complete a new CN 47 delivery bill for each further office of destination or of transit of the empty receptacles and transmit this with each dispatch of empty receptacles. 13 If empty receptacles in transit are included with other mail on a CN 37 delivery bill, the transit designated operator may include the empty receptacles in its own CN 37 delivery bill for the office of destination or of transit of the empty receptacles. 2.1 CN 69 "empty receptacles" statements 14 For surface transit mail, the designated operator of transit shall prepare a CN 69, by origin and destination office of exchange and type of mail, based on its own record of the receptacles that it forwards as closed transit and in accordance with the particulars contained in the CN 37 delivery bills that it prepares, during the quarter (RL 235). 15 The CN 69 statements of closed transit mail shall be sent in duplicate to the designated operators of destination within four months at the latest after the end of the quarter to which they relate (RL 236). 16 After accepting a CN 69 statement, the designated operator of destination shall return one copy to the designated operator which prepared it. If the designated operator of transit has not received any notice of amendment within two months of the date of dispatch, it shall regard it as fully accepted. The term fully accepted means accepted as rendered, with no changes or amendments (RL 236). 3 Determination of the weight of à découvert (open transit) items 3.1 Operations at the office of exchange of origin 17 The transmission of à découvert items to an intermediate designated operator is to be strictly limited to cases where the making up of closed mails for the country of destination is not justified. À découvert transmission should not be used when the average weight of the mail regularly exceeds three kilogrammes per mail or per day (where several dispatches are made in a day), and should not be used for M bags (RL 176.1). The office of exchange should therefore contact its central administration if it observes an increase in the quantity of mail to a country to which dispatches are not made, so that dispatches can be introduced for the country concerned. 18 For items to countries for which closed dispatches are not justified, the dispatching designated operator will have consulted the intermediate designated operators as to the suitability of using them for à découvert items to the destinations concerned. It will have notified the designated operators concerned of the date on which dispatch of mail in transit à découvert commences, providing at the same time the estimated annual volumes for each final destination. Unless otherwise agreed bilaterally by the designated operators concerned, this notification shall be renewed if, in a given statistical period (May or October) there

62 were no à découvert items observed and, consequently, no account had to be issued by the intermediate designated operator. Items in transit à découvert should, as far as possible, be sent to a designated operator that makes up mails for the designated operators of destination (RL 176.3). 19 For items sent à découvert without prior consultation to an intermediate designated operator (RL 176.4), destined for countries other than those notified by the intermediate country in the Transit Compendium, the charge provided for in article RL 211.1.5 (charge for missent items) may be applied. 20 The designated operators willing to receive items in transit for other countries will have grouped the countries of destination into a maximum of 10 groups for surface and a maximum of 10 groups for S.A.L. mail and airmail (RL 211.1), which will be found in the Transit Compendium. 3.1.1 Bundling of à découvert items 21 In the absence of special agreement, à découvert items are to be separated by country of destination (labelled with the name of each country in roman letters), or at least by group of countries of destination in bundles identified by CN 26 labels (RL 176.7 and 176.8). The CN 26 labels are also used for S.A.L. items to be forwarded by surface means and S.A.L., whereas CN 25 labels are used in cases where S.A.L. items are to be forwarded from the transit designated operator by regular airmail. 3.1.2 CN 65 bill Weight of à découvert items 22 Accounting for items in transit à découvert should, in principle, take place on the basis of the data of statistical returns, except where the transit designated operator requests that accounting be based on actual weight (RL 211.1.6). Information as to the choice made by the transit designated operator will be found in the Transit Manual. Nonetheless, accounting should take place on the basis of actual weight in the case of missent items and items posted on board ship, or sent at irregular intervals, or in quantities which vary greatly, unless the intermediate designated operator accepts that it will not be paid for the transit service rendered or agrees to base accounting for missent items on statistics (RL 211.1.7). 23 If accounting is to be carried out on the basis of statistics, à découvert transit items will be accompanied by CN 65 bills during the statistical period (RL 211.1.6). The statistical operations will be conducted annually and alternately during May in odd years and October in even years (RL 211.2.1). 24 If accounting is to be conducted on the basis of actual weight, à découvert transit items should always be accompanied by CN 65 bills (RL 211.4.1). 25 Weights should be shown separately for each group of countries of destination on the CN 65 bills. These should be specially numbered in two consecutive series for surface/non-priority à découvert items, including S.A.L. items to be forwarded by surface means or S.A.L., one for unregistered items and the other for registered items. Separate series will be used for airmail/priority items, including S.A.L. items to be forwarded by regular airmail. The number of CN 65 bills should be entered in the corresponding item of table 4 of the CN 31 letter bill (table 3 of CN 32 letter bill). Transit designated operators may request the use of special CN 65 bills listing in a set order the most important groups of countries. All CN 65 bills are to be inserted into the bag containing the CN 31 letter bill (RL 211.3.1). 26 The weight of à découvert items for each group of countries is rounded up to the nearest decagramme when the fraction of the decagramme is equal to or greater than 5 grammes; otherwise, it should be rounded down to the nearest decagramme (RL 211.3.2). 27 When the transit designated operator accepts accounting based on statistics, the CN 26 bundle label and the CN 65 bill should be overprinted (or at least marked clearly) with the letter "S" during the statistical period. When there are no à découvert items, registered or unregistered, to be inserted in a mail which normally includes such items, one or two CN 65 bills, as necessary, endorsed "Néant" (Nil) should accompany the letter bill of the mail (RL 211.2.2). All items in transit à découvert should be placed with the CN 65 delivery bill in a closed bag, which may be of transparent plastic, inserted in the bag containing the letter bill (RL 211.2.3). 28 An example of a completed CN 65 delivery bill is provided at the end of this chapter.

63 3.2 Operations at the office of exchange of open transit 29 The intermediate office of exchange checks, by sampling or systematically, the weight entered on the CN 65 bill. If it establishes that the actual weight of à découvert items differs by more than 20 grammes from the weight recorded, it should amend the CN 65 bill and immediately notify the dispatching office of exchange of the mistake by CN 43 verification note. If the discrepancy noted is within the above-mentioned limits, the entries made by the dispatching office will hold good (RL 211.3.3). 30 In the absence of a CN 65 bill, the CN 65 bill will, in appropriate cases, be prepared routinely and the irregularity pointed out to the office of origin by CN 43 note (RL 211.3.4). If the weight of missent items originating at one and the same office of exchange and contained in a dispatch from that office does not exceed 50 grammes, routine preparation of a CN 65 bill will not take place (RL 211.4.1). 3.2.1 Statement of weights received in open transit 31 For à découvert items, the creditor designated operator normally prepares a yearly CN 67 statement. This shall be done at the end of each statistical period as laid down in article RL 211.2.1 and based on the particulars appearing on the CN 65 bills prepared during that period. The total weights shall be multiplied by 12 on the CN 67 statement. If the accounts have to be prepared on the basis of the actual weight of all à découvert items instead of the statistical period, CN 67 statements shall be drawn up monthly or quarterly as preferred, on the basis of the corresponding CN 65 bills (RL 246). 4 Preparation of detailed accounts for transit (closed and open transit) and empty bags 4.1 Accounting for closed transit mail surface 4.1.1 CN 62 detailed account 32 Designated operators that have taken part in surface transit of mails must, as creditor designated operators, prepare a detailed account of transit charges for each designated operator of origin on form CN 62 as soon as all the CN 56 statements relating to a year have been accepted. 33 The CN 62 form is also used for accounting of empty bags. The CN 62 detailed account is prepared from the particulars on the CN 69 forms and sent to the debtor designated operator if the balance exceeds the exemption threshold of 163.35 SDR (RL 241.7). In the heading "Total amount receivable", decimals are ignored (RL 254.3). 34 The creditor designated operator should indicate the method of settlement on form CN 62 (RL 241.1). 35 As an exceptional measure, supplementary detailed accounts may be sent to the debtor designated operator only if they complement accounts already submitted for the year in question. The time limits of 10 months from the end of the year concerned for dispatch of these accounts and two months for their acceptance apply equally to supplementary detailed accounts (RL 239.5). 4.1.2 Acceptance of CN 62 36 The debtor designated operator must approve and return the CN 62 detailed account within two months of the date of dispatch thereof (RL 239.6 and RL 253.2). If no notice of amendment has been received within that time, the creditor designated operator will regard the account as fully accepted (RL 239.6). Furthermore, discrepancies are disregarded unless they exceed a total of 9.80 SDR per account (RL 254.3). 4.1.3 Time limit for submission of CN 62 37 The debtor designated operator is not obliged to accept CN 62 detailed accounts that are not sent to it within 10 months of the end of the year to which they relate (RL 239.5). 38 At the end of this chapter, you will find an example of a properly completed CN 62 detailed account.

64 4.2 Accounting for closed transit mail by air 39 Accounting for air closed transit mail is identical to surface closed transit accounting, except that the CN 51 (RL 170.4) detailed account form is used. 40 The basic document for the air transport of closed transit mail is the CN 38 delivery bill (RL 194.4bis.2). Information from the CN 38 is consolidated by sector on a CN 66 (RL 246.1) statement of weights, with each CN 66 giving the total weight of mail carried over a given sector. Information from the CN 66 is subsequently consolidated on a CN 51 detailed account. The total weight carried over a given sector is multiplied by the applicable rate to give the amount due for that sector. The amounts for the various sectors are then totalled. 41 The graphic below illustrates the different phases of the weight determination and accounting for closed transit by air. CN 38s for sector 1 CN 38 CN 38 Total weight sector 1 CN 66 CN 38s for sector 2 CN 38 CN 38 Total weight sector 2 CN 66 CN 51 Total amount payable in period CN 38s for sector 3 CN 38 Total weight sector 3 CN 38 CN 66 Total weight sector 1 x rate sector 1 + Total weight sector 2 x rate sector 2 + Total weight sector 3 x rate sector 3 4.3 Accounting for empty receptacles 42 Payment for the transport of empty airmail bags has been a requirement since 1 January 2001. Airlines bill the designated operators owning the bags direct. Inter-designated operator accounts arising from empty airmail bags will be limited to the settlement of transit charges when a transit designated operator reforwards bags to the owning designated operator. Bags returned by air will be sent in separate dispatches and documented on forms CN 47 and CN 31. 43 Detailed information on accounting for empty receptacles sent by air is given in Appendix B. 4.4 Accounting for open transit mail 44 The basic document for open transit and missent items is the CN 65 bill (RL 211.3). Information from the CN 65 is consolidated by sector on a CN 67 statement of weights (RL 246.2). Based on this, the CN 51 account is issued.

65 4.5 Accounting for internal air conveyance 45 Airmail dues are also payable for internal air conveyance. Internal air conveyance dues are payable when airmail of foreign origin destined for delivery in a given country is received at one or more of its principal airports and then reforwarded by air to other destinations within that country. These dues are intended to offset the costs of air transmission within the country of destination. 46 Countries which receive terminal dues payments based on cost or domestic tariffs do not receive internal air conveyance dues. Target countries are not entitled to charge other target countries internal air conveyance dues. Countries which meet the eligibility criteria for internal air conveyance dues payments as notified by the IB are entitled to charge internal air conveyance dues on incoming mail which is paid at the rates provided for in Convention article 31.3 and 4. 47 Information from the CN 31 and CN 32 letter bills is consolidated in the CN 55 statement of mails prepared quarterly for each originating exchange office. Information from the CN 55 statements can be incorporated directly into a CN 51 detailed account, or can be further consolidated in CN 56 recapitulative statements, which are then consolidated in the CN 51 detailed account. 4.6 Submission and acceptance of CN 51 accounts 48 The creditor designated operator should send CN 66 and CN 67 statements as well as the CN 51 detailed account to the debtor designated operator in duplicate as soon as possible, but no later than five months after the end of the period to which it refers. The debtor designated operator may refuse to accept accounts after this period (RL 248.1). 49 The debtor designated operator will verify these documents and return a copy of the CN 51 account accompanied by the relevant CN 66 and 67 statements only if there is an amendment (RL 248.2). 50 If the creditor designated operator disputes this amendment, the debtor designated operator should send it copies of the relevant CN 38 delivery bills. 51 Any dispute regarding amendments must be raised within two months of receipt of the amended statements and accounts. A creditor designated operator that has received no notice of amendment within two months of the date of dispatch of the accounts will regard the accounts as fully accepted. 52 An example of a completed CN 51 form is given at the end of this chapter. 5 Settlement of transit charges accounts 5.1 Settlement 53 Settlement periods are shortened for closed transit charges as the closed transit operator needs to be able to recover the costs for ongoing transport rapidly. As a consequence, provisional payment for surface closed transit are discontinued. The CN 63 form is withdrawn as from 1 January 2016 (RL 241.2). 54 Settlement of transit charges accounts shall be made according to provisions related to accounting for closed transit mail surface (part 3.1, page 64). 5.2 Methods of payment 55 The amounts due on the CN 62 statement may be settled either directly between the two designated operators concerned or, if they are both members of the system, through UPU*Clearing (RL 255). 5.3 Time limit for payment 56 In case of direct settlement, payment must be made as quickly as possible and at the latest within six weeks from the date of acceptance or notification of official acceptance of the CN 62 statement. After that

66 period, the amounts due will be chargeable with interest at the rate of 6% per annum reckoned from the day following the day of expiry of the six-week period (RL 257.10). Example 3: Set of forms with fictive contents illustrating closed transit by surface This example comprises the following completed forms: - CN 34 receptacle label from Indonesia to France - CP 83 receptacle label from Indonesia to France - CN 37 delivery bill: consignment from Indonesia to the Netherlands (closed transit post) including the dispatch above - CN 37 delivery bill: consignment from the Netherlands (closed transit post) to France (mail destination) - CN 69 statement of closed transit mail, generated by the Netherlands for Indonesia, for the 4th quarter 2017 (includes mail in CN 37 above) - CN 62 detailed account, transit charges surface mail, closed transit, generated by the Netherlands for Indonesia (corresponds to CN 69 above) - CN 69 empty: statement of empty bags handled in closed transit by the Netherlands for France, for the 4th quarter 2017 (includes empty bags appearing in CN 37 above) - CN 62 detailed account, transit charges surface mail, empty bags, generated by the Netherlands for France (corresponds to CN 69 empty above)

67 IDJKTC (IDA) MPC JAKARTA PosIndonesia CUN 67 2017-10-25 BG 1 FRCDGA (FRA) ROISSY CI LA POSTE, FR UN 19.5 IDJKTC FRCDGA CUN 7 0067 001 00 0195 26 IDTPP MV 2 NLRTM NLRTM IDJKTC (IDA) MPC JAKARTA PosIndonesia CCN 52 2017-10-25 BG 2 FRCYMA (FRA) CHILLY CEI LA POSTE, FR CN 14.6 IDJKTC FRCYMA CCN 7 0052 002 00 0146 26 IDTPP MV 2 NLRTM NLRTM

68 IDA PT.Pos Indonesia (Persero) IDJKTC JAKARTA MAIL PROCESSING CENTRE 2017-10-25 IDJKTC020314 NLA Royal PostNL NLRTMI ROTTERDAM INTERNATIONAL MAIL UNIT X X MV 2 Rotterdam MV Cargo Ltd MVCU1650212 6E IGJKTC NIAMSA 3 41.3 70 IGJKTC NIAMSA 4 DD.0 31 IGJKTC NIAMSA 3 17.D 67 IGJKTC FRCGGA 3 4D.E 27 IGJKTC FRCGGA 4 31.1 D2 IGJKTC FRCKMA D 67.1 6 E 7 87.2 122.1 48.6 A. Postman

69 NLA Royal PostNL NLRTMI ROTTERDAM INTERNATIONAL MAIL UNIT FRA LA POSTE, France FRCDGA ROISSY COURRIER INTERNATIONAL X 2017-11-18 NLRTMI513501 X PostNL Truck NL-201345-RTZ-A14 67 IGJKTF FRFGGA 3 4D.E 27 IGJKTF FRFGGA 4 31.1 112 NIAMSA FRFGGA 4 D2.2 7 4 E8.1 31.1 PNL-45324

70 NLA Royal PostNL 2018-02-05 IDA PT.Pos Indonesia (Persero) NLA Royal PostNL C 2017.10.01 FRA LA POSTE, France 2017.12.31 IDJKTC FRCDGA 2017-10-07 C UN 7 0065 2 25.8 2017-10-25 C UN 7 0066 3 56.9 2017-11-18 C UN 7 0067 3 45.9 2017-11-30 C UN 7 0068 3 51.1 2017-12-12 C UN 7 0069 4 72.0 2017-12-22 C UN 7 0070 4 78.3 Subtotal IDJKTC-FRCDGA (19) ( 330.0) IDJKTC FRCYMA 2017-10-07 C CN 7 0050 8 125.0 2017-10-25 C CN 7 0051 8 95.8 2017-11-18 C UN 7 0052 5 67.1 2017-11-30 C CN 7 0053 9 95.3 2017-12-12 C UN 7 0054 12 135.7 2017-12-22 C CN 7 0055 10 106.4 Subtotal IDJKTC-FRCYMA (52) ( 625.3) 71 955.3 1 1

71 NLA Royal PostNL X 2018-03-11 X IDA PostIndonesia 2017 324.7 BEA bpost - BELGIUM 357.2 392.9 526.0 1 600.8 1.15 1 840.92 598.1 FRA LA POSTE, France 657.9 723.7 955.3 2 935.0 1.25 3 668.75 228.1 LUA POSTES AND TELECOM Luxembourg 250.9 276.0 369.5 1 124.5 1.25 1 405.63 6 915.30 6 915 PNL-45324

72 NLA Royal PostNL 2018-02-05 X IDA PT.Pos Indonesia (Persero) NLA Royal PostNL C 2017.10.01 FRA LA POSTE, France 2017.12.31 IDJKTC FRCDGA 2017-10-07 C TT 7 0026 3 25.3 2017-11-18 C TT 7 0027 4 31.1 2017-11-30 C TT 7 0028 4 34.0 2017-12-22 C TT 7 0029 3 26.4 Subtotal IDJKTC-FRCDGA (14) ( 116.8) 14 116.8 1 1

73 NLA Royal PostNL X 2018-03-11 X FRA LA POSTE, France 2017 origin 79.9 ARA CORREO ARGENTINO 87.9 96.7 129.4 393.9 1.15 452.99 84.1 IDA PostIndonesia 92.5 101.8 116.8 395.2 1.25 494.00 134.0 NLA Royal PostNL 147.4 162.1 116.8 560.3 1.25 700.38 1 647.36 1 647 PNL-45324

74 Example 4: Set of forms with fictive contents illustrating closed transit by air This example comprises the following completed forms: - CN 38 delivery bill: consignment from Denmark to the United States (closed transit post), containing receptacles with a final destination in several Carribean countries - CN 66 statement of weights, generated by the United States for Barbados, for December 2017 (includes mail in CN 38 above) - CN 51 detailed account, transit charges airmail, closed transit, generated by the United States for Denmark (corresponds to CN 66 above)

75 DKA Post Danmark A/S DKCPHA COPENHAGEN INC 2016-11-08 DKCPHA123456 USA United States Postal Service USMIAA ISC MIAMI FL (USPS) SK 124 2016-11-08 10:35 MIA X AKE12345SK 9876543210 UN 212 GKFPHA USMHAA 4 D3.0 UN 213 GKFPHA USMHAA 2 22.D UN 10D GKFPHA BBBGHA 2 1E.E UN 67 GKFPHA KKFKBA 1 12.D E 107.E DKCPH-33425

76 USA United States Postal Service USMIAA ISC MIAMI FL (USPS) 2016-12-12 X DKA Post Danmark A/S 11 (November) 2016 US United States of America BB Barbados transfer 11-03 AUN 103 DKCPHA BBBGIA DL 2223 25.8 11-03 ACN 89 DKCPHP BBBGIA DL 2223 17.0 11-06 AUN 104 DKCPHA BBBGIA AA 864 16.2 11-06 ACN 90 DKCPHP BBBGIA AA 864 31.1 11-09 AUN 105 DKCPHA BBBGIA DL 2223 19.9 11-09 ACN 91 DKCPHP BBBGIA DL 2223 11.0 11-14 AUN 106 DKCPHA BBBGIA AA 864 33.2 11-18 AUN 107 DKCPHA BBBGIA DL 2223 31.5 11-18 ACN 92 DKCPHP BBBGIA DL 2223 16.4 11-22 AUN 108 DKCPHA BBBGIA AA 864 25.7 11-28 AUN 109 DKCPHA BBBGIA DL 2223 20.6 11-28 ACN 93 DKCPHP BBBGIA DL 2223 17.0 172.9 92.5

77 USA United States Postal Service 2017-02-26 X DKA Post Danmark A/S X Q4 2016 X 10 - October 11 - November 12 - December BB - Barbados 194.1 172.9 202.7 569.7 6.128 3 491.12 84.4 92.5 105.1 282.0 6.128 1 728.10 341.1 358.2 483.6 1 182.9 4.113 4 865.27 BS Bahamas 229.3 240.8 325.1 795.2 4.113 3 270.66 KY Cayman Islands 135.6 142.4 192.2 470.2 5.720 2 689.54 76.0 79.8 107.7 263.5 5.720 1 507.22 17 552 DKCPH-359158

78 Example 5: Set of forms with fictive contents illustrating open transit This example comprises the following completed forms: - CN 31 letter bill, generated during the statistical period - Two CN 65 bills of à découvert items corresponding to the letter bill above - CN 67 statement of à découvert weights, generated at the end of the statistical period and including data from the CN 65 bills above - Yearly CN 51 detailed account for à découvert items, based on the CN 67 above

79 BEA bpost - BELGIUM BRA CORREIOS DO BRASIL BRUSSELS EMC BEBRUA SAO PAULO BRSAOD Air A UN 7 0042 2017-05-21 IDTPP MV2 NLRTM 1 3 2 2 2 2 2 2 2 23.9 2 18.0 41.9 2 A. Postman

80 BEA bpost - BELGIUM BEBRUA BRUSSELS EMC BRA CORREIOS DO BRASIL X X X 8 BRSAOD SAO PAULO X 2017-05-21 A UN 7 0042 Group 1 1 740 Group 2 2 320 Group 3 460 PO#12345

81 BEA bpost - BELGIUM BEBRUA BRUSSELS EMC BRA CORREIOS DO BRASIL BRSAOD SAO PAULO X X X 2017-05-21 X 9 A UN 7 0042 Group 1 810 Group 3 1 820 PO#12345

82 BRA CORREIOS DO BRASIL 2017-07-13 BRA CORREIOS DO BRASIL BRSAOD SAO PAULO BEA bpost - BELGIUM May BEBRUA BRUSSELS EMC 2017 Gr 1 Gr 2 Gr 3 Gr 4 05-02 1 520 1 140 480 05-05 2 2 500 830 05-05 3 1 140 2 350 780 150 05-07 4 1 140 05-10 5 1 010 05-13 6 890 980 870 740 05-18 7 2 080 05-21 8 1 740 2 320 460 05-21 9 810 1 820 05-24 10 4 510 550 05-24 11 1 110 510 05-30 12 3 650 1 540 1 870 220 05-30 13 2 220 1 230 480 19 090 10 280 10 690 2 580 229 080 123 360 128 280 30 960 229 080 123 360 128 280 30 960

83 BRA CORREIOS DO BRASIL BEBRUA BRUSSELS EMC X 2017-09-13 X X 2017 4 - April 5 - May 6 - June Gr 1 229.1 229.1 3.128 716.62 123.4 123.4 5.110 630.57 Gr 2 128.3 128.3 6.967 893.87 Gr 3 31.0 31.0 7.726 239.51 Gr 4 124.03 2 605 PO#12345

84 Appendix A Statistical operations related to terminal dues 1 Overview of UPU system sampling requirements 1.1 Flat rate per kilogramme involving exchanges with transitional countries Sampling period Sampling days When it can be required Flows None None Revision mechanism has not been invoked Target to transitional Transitional to target Transitional to transitional 1.2 Target country system Sampling period Sampling days When it can be required Flows Yearly Three-year grace period for 48-day sampling Dispatched weight above the recommended threshold of 50 tonnes per year Target to target 1 The statistical count shall be carried out by means of continuous sampling, in which a systematic or randomized sample of receptacles is computer-selected for testing throughout the observation period. The designated operators concerned shall agree on the statistical forms to be used. For the years up to and including 2019, the statistical count shall be carried out employing 48 days of observation per year of sampling with four days per month. As it takes time to implement new IT systems and some new countries joined the target system in 2016, it is proposed to give a three-year grace period in which 48-day sampling can be used. The first mandatory year for continuous sampling will be 2020. For mail flows involving countries in the target system from 2010 and later, no sampling is required below 75 tonnes; for terminal dues calculations, a fixed overall IPK of 12.23 applies for the whole flow, including UR dispatches and independent of format separation. The actual number of registered and insured items is used for the surcharge only. 2 Bulk mail volumes are included in the flows for thresholds. 1.3 Revision mechanism Sampling period Sampling days When it can be required Flows Yearly (preferred) or quarterly or monthly Minimum of 24 days Dispatched weight more than 75 tonnes per year excluding M bags IPK greater than 15 or less than 10 Target to transitional Transitional to target Transitional to transitional

2 Formulae for estimation of annual IPK and annual items 85 2.1 Formula by mail category 3 The following formula demonstrates the method for estimating both the annual IPK and annual items for a specific mail category (air, surface, S.A.L.) for a country. The estimates of annual IPK for a mail flow can be expressed as weighted averages of the sampled receptacle IPKs. The description assumes sampling on a yearly basis. 4 Calculate the separate ratio estimate of the number of items in stratified mail flows as follows. Suppose that: yy ii xx ii number of items in receptacle i weight of receptacle i rr ii = yy ii IPK of receptacle i xx ii H number of strata nn h number of sampled receptacles in stratum h 5 A stratum is the combination of mail category, format and period (and where it is agreed, it can include receptacle type, sending office of exchange and receiving office of exchange). IPK in stratum h: RR h = NN h XX h nn h ii=1 yy ii nn h xx ii=1 ii Total number of receptacles in stratum h Total received weight in stratum h 6 Calculation of the estimated number of items and IPK in steps: Firstly, estimate the number of items in stratum h: YY h = RR h XX h Then estimate the total number of items: HH YY = YY hh hh=11 Total received weight is: HH XX = XX h h=1 Total IPK is: RR = YY XX Calculate the bias of the estimated number of items: rr h = nn h ii=1 rr ii nn h mean receptacle IPK yy h = rr h XX h BBBBBBBB h = YY h yy h nn h 1 if nn h = 1 then BBBBBBBB h = 0 Total bias in number of items is: h BBBBBBBB = BBBBBBBB h h=1 Bias in number of items in stratum h;

86 The variance of the estimated number of items per stratum is: nn h nn h VV h = NN h(nn h nn h ) nn h (nn h 1) yy ii 2 + RR h 2 xx ii 2 If nn h = 1 then VV h = 0 ii=1 ii=1 nn h 2RR h yy ii xx ii ii=1 7 Alternatively with stratum weights instead of number of receptacles (applicable if stratification includes receptacle type or if only one receptacle type is used within a stratum, and if net-to-gross weight ratio is constant): VV h = XX nn h(xx h h nn ii=1 xx ii ) ( h yy 2 ii + RR 2 nn h h 2 nn ii=1 xx ii 2RR h h ii=1 ii=1 yy ii xx ii ) nn ( h nn xx ii=1 ii ) 2 h (nn h 1) If nn h = 1 then VV h = 0 Total variance is calculated as: HH VV = VV h h=1 8 Calculate the within 95% confidence limits of the IPK as follows: AAAAAAAAAAAAAAAA = 11. 9999 VV + BBBBBBBB 22 YY

87 Appendix B Information on airmail accounting 1 This appendix contains information on rates and processes applicable to the transportation of mail by air. It aims to help designated operators in their relations and accounting with airlines. 1 The basic airmail conveyance rate 2 Airmail accounting stems from the need to pay airline companies for the transport of mail. Airlines and designated operators typically arrive at rates payable for the carriage of mail through negotiation. In the absence of any agreement on a rate, the so-called basic airmail conveyance rate (BACR) is applicable. This rate is determined by the International Bureau every year and is based on statistics supplied by the International Civil Aviation Organization (RL 244.2). This formula is based on airline operating costs and is determined as follows: T = T = A = B = C = D = E = F = (A - B - C + D + E + F), where Basic rate per t-km (priority for airmail is guaranteed within this rate). Weighted average operating expense per t-km performed. Cost of passenger services per t-km. Percentage of the cost of ticketing, sales and promotion (based on the number of passengers in relation to traffic volume). Expenses of non-operating items per t-km performed. 10% of (A - B - C + D) as profit. Income taxes per t-km performed. 3 This rate is rounded to the nearest thousandth of an SDR per kilogramme of gross weight and per kilometre; it applies proportionally to fractions of a kilogramme. 2 Definition of tonne-kilometre and kg-kilometre 4 The term t-km has been used in the formula cited in the previous paragraph. This term stands for "tonne-kilometre" and represents the service performed in carrying one tonne of mail for one kilometre. In other words: 1 tonne-kilometre = 1 tonne x 1 kilometre = 1,000 kg x 1 kilometre 1 kg-kilometre = 1 tonne-kilometre divided by 1,000 = 0.001 tonne-kilometre = 1 kg x 1 km. 5 Costs for air transport of mail are typically measured and cited in terms of t-km or kg-km. The basic airmail conveyance rate for the year 2017 was fixed at 0.597 SDR per t-km, equivalent to 0.000597 SDR per kg-km. 3 How weights and distances are measured 6 Air conveyance is thus billed for on the basis of: the weight of mail carried; the distance for which mail is carried. 7 Weights are expressed in kilogrammes, and distances are expressed in kilometres. Unless there is an arrangement to the contrary, distances are as given in the List of Airmail Distances published by the International Bureau. As the IB has received many inquiries about how these distances are calculated, it is worthwhile indicating the procedure followed by IATA in calculating the airmail distance for a given city pair:

88 the great circle distance between the two airports concerned (between the two airport reference points) is calculated using the latitudes and longitudes of these reference points and a standard trigonometrical formula; this distance is increased by 2.5% to cover any intermediate stops; the resulting figure is rounded off to the nearest 100 km. 8 Taking London's Heathrow Airport and New York's John F. Kennedy Airport as an example, we have: Great circle distance between London (LHR) and New York (JFK) 5,538 km Add 2.5% of 5,538 km (138.5 km) 5,676 km Rounded off to nearest 100 km 5,700 km Airmail distance 5,700 km 3.1 Examples of rate calculations 9 Some examples of rate calculations are provided below: a b c The UPU's basic airmail conveyance rate is 0.597 SDR per t-km in 2017 or 0.000597 SDR per kg-km: A designated operator and an airline agree upon a rate of 0.400 SDR per t-km for the carriage of mail. What is the amount payable per kilogramme over a sector for which the applicable distance is 3,700 km? (In the context of this section of the guide, the word "sector" is intended to mean that portion of the flight between the airport serving the exchange office of origin and the airport serving the exchange office of destination.) We have: rate per kg-km = 0.400 divided by 1,000 = 0.0004 SDR per kg-km; rate per kg for 3,700 km = 0.0004 x 3,700 = 1.480 1.5 SDR. (The prices for international and internal air conveyance obtained by multiplying the effective basic rate by the distance are rounded up to the nearest tenth of an SDR when the number made up by the figure of hundredths and thousandths is equal to or greater than 50; they are rounded down to the nearest tenth of an SDR in other cases RL 244.7.) Some examples of rounding off when rates per kg are calculated to three decimal places: Example 1: 0.439 SDR will be rounded off to 0.4 SDR (last two digits = 39<50) Example 2: 0.550 SDR will be rounded off to 0.6 SDR (last two digits = 50) Example 3: 0.465 SDR will be rounded off to 0.5 SDR (last two digits = 65>50) A designated operator and an airline agree upon a rate of 0.400 SDR per t-km for the carriage of mail. What is the amount payable if 550 kg of mail is carried over a sector for which the applicable distance is 3,700 km? We have from the previous example: Rate per kg for this sector (3,700 km) = 1.5 SDR; Amount payable = rate per kg x number of kg = 1.5 x 550 = 825 SDR. 3.2 Basic regulations concerning the payment of airmail accounts 10 It is clear that a designated operator dispatching mail has to pay for the transport of this mail to the airline(s) participating in its carriage. An airline usually bills the dispatching designated operator of origin directly. It is also possible for the dispatching designated operator to pay the designated operator of the country which the airline comes under; the latter designated operator subsequently pays the airline. This option, however, is infrequently used. Further, a designated operator which reforwards mail on behalf of another designated operator will claim conveyance dues from the latter. 11 The question of "to whom" air conveyance dues should be paid is dealt with in article RL 250 of the Letter Post Regulations. This is reproduced below:

89 "Article RL 250 Payment of air conveyance dues 1 Air conveyance dues shall be payable to the airline conveying the airmails for all or part of the distance flown. 2 Notwithstanding this rule, the conveyance dues may be paid to the designated operator of the country which the airline conveying the airmails comes under, subject to an agreement between the airline concerned and that designated operator. 3 Conveyance dues for priority items, airmail items and S.A.L. items when transported by air in transit à découvert shall be paid to the designated operator which reforwards these items. 4 Unless other arrangements have been made, conveyance dues for airmails directly transhipped between two different airlines shall be settled by the designated operator of origin: 4.1 either with the first carrier, which shall then be responsible for paying the subsequent carrier; 4.2 or with each carrier involved in the transhipment." 3.3 Some typical scenarios 12 Some typical scenarios arising in the transport of airmail are now described to illustrate the intention of article RL 250. All countries, carriers and flight numbers have been chosen for illustrative purposes only. Scenario A LX 100 Zurich (ZRH) London (LHR) 13 Mail is dispatched from Zurich with the destination of London using a Swiss flight. Swiss is a Swiss airline. In this case, Swiss will invoice the Swiss designated operator. Scenario B BA 150 Zurich (ZRH) London (LHR) 14 Mail is dispatched from Zurich to London using a British Airways flight. British Airways is a British airline. British Airways will, however, usually invoice the Swiss designated operator direct, although RL 250.2 allows for the possibility of receiving payment through the British designated operator (Switzerland would pay Great Britain, which would subsequently pay British Airways).

90 Scenario C LH 1507 Zurich (ZRH) London (LHR) 15 Mail is dispatched from Zurich to London using a Lufthansa flight. Lufthansa is a German airline. Lufthansa will also, however, usually invoice the Swiss designated operator direct, although RL 250.2 allows for the possibility of receiving payment through the German designated operator (Switzerland would pay Germany, which would in turn pay Lufthansa). Scenario D LX 100 BA 1255 Zurich (ZRH) London (LHR) Mexico City (MEX) 16 Mail is dispatched from Zurich to Mexico City. This mail is transited via London. Swiss is used to carry the dispatch from Zurich to London, and British Airways is used to transport the dispatch from London to Mexico City. There are two fundamental possibilities at London: a b The mail is directly transhipped between Swiss and British Airways. The British designated operator is not involved, although it must be informed about this arrangement (RL 192). Billing will be carried out in accordance with RL 250.4. Swiss hands the mail to the British designated operator. That operator, which may now include this mail in its own dispatch to Mexico City, hands over the mail to British Airways for subsequent carriage to Mexico City. In this case, British Airways, which has received its "order for carriage" from the British designated operator, will bill that operator. The contractual relationship is between these two parties. The British designated operator will bill the Swiss designated operator for the carriage of the Swiss origin mail, which it may have included in its own dispatch to Mexico City. 4 The CN 38 delivery bill 17 The CN 38 delivery bill (or where applicable, its electronic equivalent) is the fundamental document used by airlines and designated operators for billing purposes. It is this document which first records the weight and the sector the two basic items of information required to determine conveyance dues of mail carried. Information from this document is subsequently consolidated to arrive at the actual accounts relating to the carriage of airmail. 18 A completed CN 38 delivery bill with the various fields indicated with numbers is provided below. The numbers of the fields and their purpose are as follows: i ii iii iv Designated operator of origin. This is the designated operator preparing the CN 38 delivery bill. Office of origin of the bill. This is the dispatching office of exchange preparing the CN 38 delivery bill. Office of destination of the bill. This is the destination office of exchange, to which the CN 38 is addressed. Date. This is the date on which the CN 38 is prepared.

v vi vii viii ix x xi xii xiii xiv xv 91 Serial No. This is a serial number given to the CN 38 to aid its identification should this be required for reconciliation purposes. Priority. This box is checked if the CN 38 lists priority mails. By airmail. This box is checked if the mails listed on the CN 38 are to be transported by air (this is to allow for the possibility that airmail may be transported by another mode of transport). Flight No. This is the number of the flight on which the mails listed in the CN 38 are to be carried. Date of departure. This is the date of the flight referred to in field 8 above. Time. This is the departure time of the flight referred to in field 8 above. Airport of direct transhipment. The name of the airport where mail is directly transhipped from one airline to another, or by the same airline. In this case both flight numbers are indicated in field 8, Flight No. (e.g. LX 200/BA 195). Airport of offloading. This is the final destination airport of the CN 38 bill, where the mails listed on the bill are to be offloaded and transported to the destination office of exchange. No. of container. Should one or more containers be used, the container number is indicated (e.g. AKE 5647). No. of seal. The number of the seal used to seal the respective container is indicated here. Mail No. This is the mail number attributed by the office of origin of the relevant mail included in column 1 of the CN 38. A CN 38 can include several mails from the same office of origin, or mails with different offices of origin which may be in different countries. For example, a CN 38 prepared by Zurich for London could include mails 29 and 30 originating in Zurich and destined for London, and include mail 56 from Bombay transiting through Zurich on its way to London. The latter (mail 56 from Bombay) would normally have been entered on another CN 38 from Bombay to Zurich. xvi Office of origin. This is the office of origin of the mail bearing the number indicated in column 1. xvii xviii xix xx xxi xxii xxiii Office of destination. This is the office of destination of the mail bearing the number indicated in column 1. Number of letter post/cp/ems receptacles. This is the number of receptacles comprising the mail listed in column 1. Receptacles include bags, trays, etc., used to store mail. An airline container is not included. Gross weight of receptacles, etc. This is the gross weight of the relevant receptacles (Letter Post, CP, and EMS) which make up the mail listed in column 1. Weights are expressed to the nearest 100 grammes. Observations (including the number of M bags and/or loose parcels). Self-explanatory. Dispatching office of exchange. Signature. This is the signature of the dispatching office of exchange preparing the CN 38. The official of the carrier or airport. Date and signature. This is the signature of the official accepting the mail on behalf of the airline. Office of exchange of destination. Date and signature. Date of receipt and signature of the official at the office of exchange of destination, to which the CN 38 is addressed.

92

93 19 An example of a correctly completed CN 38 form is given at the end of this chapter. All indications given therein are for illustrative purposes only. It will be noted that this CN 38, prepared by the DELHI AIR exchange office for LONDON FS (carriage by Air India from Delhi to London Heathrow) lists the following mails: Mail No. Office of origin Office of destination 151 DELHI AIR LONDON FS 152 DELHI AIR LONDON FS 206 DELHI AIR DUBLIN D (to be reforwarded from London) 352 COLOMBO LONDON FS (mail reforwarded from Delhi) 20 This CN 38 will give rise to the following accounting settlements: a b c Air India will bill the Indian designated operator for transporting all this mail; Mail 206 the British designated operator will bill India for the London Dublin sector; Mail 352 the Indian designated operator will bill Sri Lanka for the Delhi London sector. 21 It may be added that for S.A.L. mails, the CN 41 delivery bill is used instead of the CN 38. It will be noted that this is practically identical to the CN 38. Only fields 6 and 7 of the CN 38 (pertaining to priority and transmission by airmail) are missing. 5 Empty bag billing scenarios 22 Some examples to demonstrate the billing process for empty bags are given below: Scenario A 23 India (sending designated operator) returns empty bags to Great Britain (owning designated operator) using Air India. Al 111 Delhi (DEL) London (LHR) Air India will bill Great Britain on the basis of the CN 47 established by India. Scenario B 24 India (sending designated operator) returns empty bags to Great Britain (owning designated operator) using British Airways. BA 144 Delhi (DEL) London (LHR) British Airways will bill Great Britain on the basis of the CN 47 established by India.

94 Scenario C 25 India (sending designated operator) returns empty bags to Great Britain (owning designated operator) in transit via Zurich. Air India is used for the sector Delhi Zurich, and British Airways for the sector Zurich London. Direct transhipment is made at Zurich. Direct transhipment Al 111 BA 265 Delhi (DEL) Zurich (ZHR) London Heathrow (LHR) Air India will bill Great Britain for the sector DEL ZRH on the basis of the CN 47 established by India. British Airways will bill Great Britain for the sector ZRH LHR on the basis of the CN 47 established by India. Scenario D 26 India (sending designated operator) returns empty bags to Great Britain (owning designated operator) in transit via Zurich. Air India is used for the sector Delhi Zurich and British Airways for the sector Zurich London. Transfer at Zurich is performed by the Swiss designated operator. Swiss designated operator Al 111 BA 265 Delhi (DEL) Zurich (ZHR) London Heathrow (LHR) Air India will bill Great Britain for the sector DEL ZRH on the basis of the CN 47 established by India. British Airways will bill Great Britain for the sector ZRH LHR on the basis of the CN 47 established by Switzerland. Switzerland will also bill Great Britain for transit charges. 27 Thus, inter-designated operator accounting in respect of empty airmail bags will be limited to the settlement of transit charges, when applicable. Costs for the transport of these bags will be billed to the designated operator owning the bags direct by the carrier(s) concerned. No inter-designated operator accounts for air conveyance costs will be generated by empty bags alone. 6 Internal air conveyance 28 Foreign-origin airmail destined for delivery in a given country is received at one or more principal airports of the country. While some of this mail will be distributed in the cities served by the airports of arrival of this mail and their surrounding areas, some mail can be re-forwarded by surface to other destinations. However, it is possible that some of the mail will be reforwarded by air to other destinations in the country. The

95 destination country is entitled to claim internal air conveyance dues from the designated operator of origin of the mail. These dues are intended to offset the costs of air transmission within the country of destination. Designated operator of destination Designated operator of origin A B C Mail reforwarded internally from B D Airport of arrival in designated operator of destination 29 A designated operator sends mail from airport A to another designated operator which receives this mail at airport B. Some of this mail is delivered in city B or reforwarded from B by surface. However, some of the incoming mail is given further air transmission to airports C and D for further delivery within the designated operator of destination. The designated operator of destination is entitled to claim internal air conveyance dues from the designated operator of origin to offset the costs of domestic transmission by air. 30 Internal air conveyance dues for a given designated operator will be fixed in the form of a single price. This price includes the costs for air transmission within the country, less the corresponding surface conveyance costs. This price cannot exceed the basic airmail conveyance rate as determined by the Montreal Formula for that year, and is also determined from the weighted average distance of the sectors flown by the international mail on the internal network. This distance is calculated by the International Bureau on the basis of data furnished by designated operators (RL 244.5). 31 Internal air conveyance dues are, however, not payable if (article 34.4 and 5 of the Convention): the weighted average distance does not exceed 300 km; the terminal dues levied by the designated operator of destination are based specifically on costs or on domestic rates. 32 Internal air conveyance dues are not payable where target system terminal dues are paid for bulk mail because those rates are based on domestic rates. 33 For calculating the weighted average distance, the designated operator of destination will exclude the weight of all mails for which the terminal dues calculation is based specifically on costs or on domestic rates (Convention article 34). 34 Dues payable for air conveyance of airmails in transit between two airports in the same country may also be fixed in the form of a single price. This price is calculated on the basis of the rate actually paid for air conveyance within the country of transit. The price, however, cannot exceed the basic airmail conveyance rate. It is also calculated according to the weighted average distances of the sectors flown by international mail on the internal air network of the transit country (RL 244.6). 6.1 Process flow for billing internal air conveyance dues 35 The process flow for billing internal air conveyance is as follows: a b CN 31 and CN 32 letter bills are sorted by origin exchange office. These letter bills are consolidated in a CN 55 statement of mails, prepared quarterly for each origin exchange office.

96 c CN 55 statements can be incorporated into a CN 51 detailed account at this stage. If the CN 51 is prepared on a half-yearly or annual basis, however, the CN 55 can be consolidated in a CN 56 recapitulative statement of mails prepared every quarter. The CN 56 accounts are then incorporated into the CN 51 account. The total weight of mail therein is multiplied by the rate per kg, which is calculated and published by the IB in a circular for eligible designated operators. Expressed graphically: CN 31 CN 32 CN 55 CN 56 CN 51