UK Royal Mail's rivals deliver new blows

THE BBC, banking giants HSBC and HBOS and mobile phone groups O2 and Orange are set to give the Royal Mail the sack – the latest major companies to quit the state-owned postal operator over cost and service levels.

The defections are likely to see more than two billion letters handled this year by private postal operators in contracts worth upwards of Pounds 300 million. The BBC and O2 are close to taking their business to UK Mail, the postal arm of troubled quoted courier group Business Post.

THE BBC, banking giants HSBC and HBOS and mobile phone groups O2 and Orange are set to give the Royal Mail the sack – the latest major companies to quit the state-owned postal operator over cost and service levels.

It is understood UK Mail is also vying with main rival TNT to win lucrative work for HSBC, Halifax group HBOS and Orange. TNT is the UK-based postal arm of the Dutch Post Office, TPG.

UK Mail, TNT and the DHL arm of German giant Deutsche Post are aggressively targeting major corporates to take bulk postal contracts away from Royal Mail.

Lloyds TSB, Barclays, BSkyB, Next, npower, Phones4U and credit-card giant MBNA have switched their contracts to TNT.

UK Mail recently picked up the store-card interests of GE Capital, handling the customer billing and mailshot requirements of GE Consumer Finance, which runs up to 70% of Britain’s store cards. It has also won the contract for mobile phone firm 3 and has deals with Vodafone, Powergen and Royal Bank of Scotland. DHL has contracts with Tesco Clubcard and cable group NTL.

Royal Mail, under chairman Allan Leighton and chief executive Adam Crozier, has been open to full competition from the private sector since 1 January.

TNT has been operating in the corporate letters market for 18 months and envisages that within another two years it will be running fleets of orange mail vans.

“We can offer customers massive savings on large volumes as we typically come in 10% to 15% cheaper than Royal Mail,” said TNT marketing chief Simon Dolph. “And we are more flexible, offering to pick up mail up to two or three hours later than Royal Mail.”

The new postal players handle and sort corporates’ mail-outs and then pay Royal Mail to use its depots and postmen for final delivery.

Of the customer losses, a spokesman for Royal Mail said: “It is the nature of the open market.

We have been talking to the Government about investment to make it easier for us to do business.”