UK Royal Mail Group changes plans for bulky post

Royal Mail has amended its plans for size-based pricing to provide limited relief for companies that send light but bulky items through the post, including mail order photo finishers and compact disc retailers.

The proposals, which still have to be approved by regulator Postcomm, are more generous to some companies sending bulky packages than the initial plans outlined last April. But Royal Mail is sticking with its intention of abandoning its practice of charging solely according to weight.

The move to size-based pricing is supported by many in the mail order industry, including homeware retailers. But it is opposed by greeting card makers, magazine publishers and mail order photo finishers, who claim it would cost their industries millions of pounds in extra postage.

Anthony Ward of Bonus Print said Royal Mail’s revised plans were an improvement on its initial proposals, which would have produced a four-fold increase in the mail order photo finishing industry’s postal costs, wiping out its profit margins. “We are fighting for our very lives,” he said. “However, it appears that Postcomm has made our plight clear to the Royal Mail. It looks like we are now looking at a price rise in the hundreds of thousands of pounds rather than millions of pounds.”

Postcomm has been talking with Royal Mail and the mail order industry about size-based pricing for several months and will publish the results of its consultation next week.

Royal Mail said yesterday it would raise its proposed maximum thickness for a large letter, which would cost more than a standard letter but less than a parcel, from 10mm to 25mm; helping those sending bulky items such as CDs and DVDs.

For response services using prepaid envelopes, such as photo finishers, the increase is from 10mm to 35mm, the width of a conventional roll of film.

However, the proposals would not change Royal Mail’s revenues: to offset the lower prices for some businesses, charges to others would be higher.

The move to size-based pricing is expected to affect up to a third of all business and consumer mail and would be introduced after April 2006.

Lorna Clarkson, Royal Mail’s commercial pricing director, said the size and shape of letters and packages, rather than their weight, were the main determinants of the cost of collection, sorting and delivery. “These proposals start to redress the balance,” she said.

The changes affect anyone using the post, but the biggest effects will be felt by business customers. Next January the business post market is to be opened fully to competitors, which could use different pricing structures.