TNT set to put orange-clad postmen on streets

The biggest private post competitor to the Royal Mail is ready to roll out a door-to-door letter delivery system in cities across the UK, bringing staff in an orange uniform shoulder to shoulder with postmen and women dressed in the familiar blue and red.

TNT of the Netherlands said it would take a final decision over the next couple of months when it had gained final data from its trials in Glasgow and Manchester but was now “hopeful” that it would proceed with its plans for the biggest ever challenge to Royal Mail’s position.

Reporting an 11.3% increase in worldwide operating profits and earnings before tax and interest of EUR355m (GBP238m), TNT chief executive Peter Bakker said Britain was a key market showing healthy growth and the company was now distributing more than 1bn pieces of mail a year here. Royal Mail customers to have switched to TNT include BT, which recently signed a contract worth up to GBP90m.

Items handled by TNT – apart from those involved in the trials – are collected before being handed over to the Royal Mail for the “last mile” delivery. But that will change when TNT starts offering a complete next-day service in many locations. “I am a cautious Dutchman so I will not make a final decision until we have all of the information in from our trials, but it is reasonable to expect it is our ambition to roll out the service to other cities. I am hopeful it will happen,” Mr Bakker said.

Royal Mail refused to be rattled by the plans. A move of this sort by TNT or another private operator was “what you would expect from a market open to full competition”, it said last night.

The Dutch company is one of several private postal companies supporting a move by the European commission to investigate the way the UK government has been dealing with the finances of the Royal Mail – in particular sums made available to help with the pension fund.

Mr Bakker said there was nothing vindictive about these challenges, which are known to have incensed Royal Mail, they were just the inevitable “noise” that would accompany any opening up of a formerly monopolised market.

TNT is facing similar challenges as the incumbent in the Dutch system where it has been losing mail volumes, but Mr Bakker said TNT was in a different position to state-owned Royal Mail. “We were privatised in 1989 when the government sold all its shares, so there is no special relationship and state aid is not possible,” he said.

But Royal Mail is angry that it is being investigated when Britain has been at the forefront of mail liberalisation in Europe. It says private firms should not be able to cherry-pick the best customers and areas for delivery leaving Royal Mail under obligation to provide a universal service.

Royal Mail also says the Netherlands does not allow competitors to use the “final mile” delivery service of TNT, making it more risky and expensive to set up in competition there. Access to Royal Mail’s system has grown from none three years ago to 2.5bn items annually in 2006 – one in eight letters.

TNT wants to roll out its door-to-door operation to large cities in Britain but is unlikely to offer next-day delivery to more remote rural areas, critics argue. But the Dutch company said yesterday that private companies were also working at a disadvantage, particularly from having to add VAT to services, unlike Royal Mail. The European commission is looking at this issue in Britain, Germany and Sweden.