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TNT Post UK end-to-end delivery pilot “progressing well”

Monday, August 6th, 2012

PostNL will decide early in 2013 on whether to roll out TNT Post UK’s end-to-end delivery services to other parts of the UK.

The company said today that the trials started in April are showing “excellent results” so far, with around 300 TNT Post delivery staff delivering mail to about 350,000 households in West London and parts of Central London.

The trial is attempting to break the strangehold that Royal Mail has on the last mile in the UK. The universal service provider delivers about 99% of all mail on the final mile, with competitors in the market generally handing over their mail to Royal Mail for final delivery.

PostNL noted in its results presentation today that the initial project area has now expanded to parts of Westminster with the opening of a new delivery office in the Victoria area.

Executives at the Dutch postal operator said this quarter has also seen confirmation from UK regulator Ofcom that it will not step in to restrict TNT Post UK’s end-to-end activities unless something major changes with the current plan.

Ofcom is monitoring the trial in case it affects the financial viability of Royal Mail’s universal postal service.

“So far we have seen excellent results – end to end is progressing well,” said Herna Verhagen, the PostNL chief executive, of the project today. “There is still six months to go for this pilot, so the first evaluation will be early 2013, and only then will a decision be made on a wider roll out.”

The PostNL CEO added that the decision next year would not merely involve whether to extend the service across the UK, but also on how the expansion would be phased in.

Jobs

TNT Post UK, one of the biggest private sector rivals to the Royal Mail in the UK postal market, has hopes of creating 20,000 jobs over the next five years through plans including a possible nationwide roll-out of end-to-end delivery.

To run a full end-to-end service, the company would need government and regulatory support, potentially including further reductions in any remaining VAT advantages that Royal Mail has. Ofcom could also decide to impose certain conditions on a TNT Post UK nationwide delivery service, such as certain delivery standards like six-day-per-week delivery, and also a financial contribution to the provision of the universal service if required.

The end of last month saw TNT Post UK suggesting that the city of Bristol could be one of the locations where TNT Post UK would invest in local infrastructure to facilitate part of a new mail delivery service for households and businesses across the UK.

The company invited local Member of Parliament Jack Lopresti to tour its Patchway Industrial Estate depot in the Bristol area to hear of its plans for creating jobs through its new delivery services.

The visit also marked five years of TNT Post’s operations in Bristol, in which time the company has created 160 jobs in the area.

During the visit, TNT Post UK chief executive Nick Wells noted the importance of keeping government and regulators on side, saying: “We look forward to significant growth in our local operations if we get government backing for our postie jobs creation programme.”

An international subsidiary of PostNL, TNT Post UK currently claims to handle about 22% of UK mail volumes, with its clients including companies like Barclays, BT, Centrica, npower and Sky. Today’s results presentation from PostNL revealed that TNT Post UK has seen its volumes growing by about 5% in the last quarter, compared to the same period in 2011, with revenues up 11%.

Much of the growth has come from larger customers, however, with some declining volumes seen in TNT Post UK’s regional customer base.

Source: Post&Parcel/PostNL

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