UK cost of postage to be based on size and shape of mail

The cost of sending letters and parcels will be determined by the size and shape of an item as well as its weight, according to plans approved by the postal regulator Postcomm yesterday.

The new pricing structure will increase the cost of sending lightweight but bulky items, such as photographic film, video tapes and large greeting cards, but will cut the postage on some heavier items, such as catalogues and books.

The cost of sending a 480g box of chocolates, for example, will decrease from Pounds 1.78 to Pounds 1.59. But the charge for a 30cm by 38cm poster in a 300g cardboard tube will rise from Pounds 1.07 to Pounds 1.59.

The system will be introduced in September 2006, following a multimillion pound marketing campaign, but will be revenue-neutral for Royal Mail.

The national operator has been pushing for changes to make postal charges fairer and more reflective of the true cost of delivery to help it compete once the postal market opens to full competition next January. Lorna Clarkson, Royal Mail's director of commercial policy and pricing, said: "This is a small but very welcome step in that direction."

Mail order companies generally support the new system but the greetings card industry, mail order photograph developers and magazine publishers claim they stand to lose millions of pounds from the changes.

Anthony Ward, of Bonus Print, said the mail order photo developing industry would see a 15 per cent cost increase but this was better than the 300 per cent rise under Royal Mail's original proposals.

"We would still qualify as one of the losers (from the changes) but under the initial Royal Mail proposals we would have been finished as an industry," Mr Ward said.

The Greeting Card Association estimates that up to 20 per cent of the 2.9bn cards sold each year are not going to fall within the lower price band agreed by Postcomm. Handmade cards and those with badges are expected to be most affected.

William McCracken, a special adviser to the association, said: "The main concern is that people are going to get confused."

Royal Mail would also like to increase the absolute level of prices it charges fordeliveries.

Postcomm is consulting on pricing proposals that would freeze Royal Mail's average domestic prices until 2010 and allow the price of a first class stamp to rise to no more than 34p.

Royal Mail strongly opposes these plans. The company reported a loss of Pounds 235m on stamped mail in the last financial year.

FACTFILE: ROYAL MAIL PUTS ITS PRICING IN PROPORTION
PA News, p 1 08-18-2005
By PA By Rachel Williams

Postal regulator Postcomm has approved Royal Mail's plans to make the cost of posting letters and packets depend on their size and shape as well as weight.

:: The move has been described as the biggest change in the postal pricing structure since the introduction of the Penny Black in 1840.

:: The “Pricing in Proportion” system will come into effect from September next year.

:: It will mean higher charges for light but large items, such as posters, but make some heavier items, such as books and catalogues, cheaper.

:: Prices on about 30% of all items posted are expected to be affected, with roughly half of those costing less and half costing more.

:: The changes will not alter Royal Mail revenue.

:: Under the changes, first-class letters weighing up to 100 grams will cost just 30p to post, whereas those heavier than 60 grams currently cost 46p.

:: But a large greetings card weighing less than 60 grams, which at present needs a 30p stamp to send first class, will cost 42p to post.

:: A box of chocolates weighing 480 grams will decrease from £1.78 to £1.59.

:: A poster measuring 30x38cm in a cardboard tube and weighing 300 grams will increase from £1.07 to £1.59.

POSTAL PRICING SHAPING UP FOR BIG SHAKE-UP
PA News, p 1 08-18-2005
By PA By Rachel Williams

The cost of posting letters and packets will depend on their size and shape as well as weight in the future after the postal regulator approved the plans today.

The Royal Mail's move – described by Postcomm as the biggest change in the postal pricing structure since the introduction of the Penny Black in 1840 – will mean higher charges for light but large items but cheaper costs for some heavier items, such as books and catalogues.

The “Pricing in Proportion” system, which will come into effect from September next year, is expected to affect prices on around 30% of all items posted.

Of those, roughly half will cost less and half will cost more, with the changes set to make no change to Royal Mail revenue.

Post offices will have templates so that customers can measure their mail, with lightweight but big or bulky items such as posters, video tapes, photographic film and very large greetings cards likely to end up more expensive to send.

Royal Mail estimates that 20% of stamped mail for consumers and 30% of business mail will be affected by the changes.

“This is a major change to the way people pay for their post,” Postcomm chairman Nigel Stapleton said.

“It will promote the development of a successful and growing postal market by allowing Royal Mail to bring its prices much more closely into line with its costs.

“This is particularly important given the full liberalisation of the postal market in January.”

Royal Mail's case for the changes was that light-weight mail that is large or bulky costs more to transport, sort, handle and deliver than regular size items.

Postcomm said the announcement reflected “substantially revised proposals” from Royal Mail after two years of consultation.

In its most recent consultation the regulator proposed to allow the new charges to be introduced from next April, but the date was put back to allow postal users at least 12 months to prepare.

It has agreed to mitigate some of the effect of price rises for business customers who spend more than £100,000 a year and find the changes add 50% or more to their bill.

Lorna Clarkson, director of commercial policy and pricing, said: “Royal Mail needs to be able to reflect its costs in its prices.

“This is a small but very welcome step in that direction.

“However, much more needs to be done. Royal Mail will be fighting very hard to achieve fair, fully cost-reflective prices in the current price control negotiations with Postcomm.

“This new system will be fairer for customers, as well as more accurately reflecting the costs to our business.”

Most people will find the price of posting a letter will be the same, Postcomm said.

Under the changes first class letters weighing up to 100 grams will cost just 30p to post, whereas those heavier than 60 grams currently cost 46p.

The first-class stamp price of a large letter weighing 750g and less than 25mm thick will drop from £2.71 to £1.23

But a large greetings card weighing less than 60 grams, which at present needs a 30p stamp to send first class, will cost 42p to post.

First class stamp postage on a 100 gram packet more than 25mm thick will rise from 46p to 94p.

Similar pricing changes have already been introduced in countries including Australia, Canada, Japan and the US.