Businesses benefit from postal competition

Competition in the postal market is showing “great promise” as businesses benefit from lower mail prices and a better service, the industry regulator said today.

Postcomm said its latest Business Customer Survey showed a competitive market had delivered early benefits, although more progress was still needed.

One fifth of the 1,213 firms quizzed said mail prices had reduced significantly, while 34% thought the quality of Royal Mail’s service had improved and 38% believed the choice of operator had improved.

Sarah Chambers, chief executive at Postcomm, said: “The results of the survey show there is great promise for the further development of competition in the UK mail market, but it is clear there is much still to be done.

“Although Royal Mail remains by far the largest operator in the market, competition has encouraged it to raise its game, especially on quality of service.”

The postal services market was opened to full competition in January, although companies have been able to enter the bulk mail market since 2003.

At the moment, Royal Mail accounts for 96% of the addressed letter market, which does not include parcels, although rival firms are attracting more customers.

Postcomm said twice as many businesses had switched to major competitors such as TNT, DX and DHL than in the previous year.

According to the group’s Competitive Market Review there has also been an increase in the mail carried through “access agreements”, which allows firms to collect and sort mail before dropping it at a Royal Mail base for delivery.

Royal Mail has made 1.2 billion deliveries using the out-sourced system so far this year, compared to 87 million in 2004/2005.

Businesses generate 87% of mail in the UK market, with domestic mail accounting for 13%. Post sent from businesses to customers is the largest segment – making up 60% of mail volumes.