Rivals gear up to take small firms' business off UK Royal Mail
COMPANIES posting as little as 100 letters at a time could help to lead an exodus of trade from Royal Mail, after full competition opens up from today.
Postwatch, the consumer group, predicted that rivals to Royal Mail will begin targeting small businesses after the initial push for big customers such as banks, utilities and government departments recedes.
A spokesman for Postwatch said: “Already UK Mail offers a service for people posting 250 items in one go. We think that will fall to around 100 by the end of the year.
“We are encouraging small firms to go on to the website of the regulator Postcomm, check who the rival operators are and contact them.”
From today Royal Mail’s rivals will be able to offer small businesses and domestic customers a service alongside the larger business market in which they already compete.
A large segment of the business postal market has been open to competition for nearly two years and Royal Mail has lost only 3 per cent of its revenue. But its business customers include a relatively small number of very large users. Some of these have moved to TNT and UK Mail, a division of Business Post, but Royal Mail fears that the defection of several more big customers could have a large impact on its revenues.
Rivals are also considering offering “end-to-end” services in cities in a move that would deprive Royal Mail of its “last-mile” revenues -taking already sorted mail and delivering it for rivals.
Industrial estates could also be a lucrative ground for new postal providers.
There the post of several small companies could be collected, producing more cost-effective volumes.
Royal Mail said that it would “fight for every letter” but it also emphasised that it needed investment help from the Government.
A Royal Mail spokesman said: “Royal Mail is determined to compete successfully in the open market but in order to do that we need a fair regulatory regime and the ability to invest Pounds 2 billion in the modernisation of the business.”
Royal Mail will also be hoping for a commitment from the Government in the next few weeks of a cash injection of about Pounds 2 billion. The postal group has argued that it needs state help for new equipment to enable it to catch up with competitors after years of under-investment.
The Government has said that it will look at providing money on a commercial basis and is looking at mounting a rights issue -with all shares going to the Government.
