TNT Post increase presence in the North-West of England
TNT Post announced the investment of a further GBP 1m in the north-west of England.
Whilst a revamp of sorting operations by Royal Mail in the north-west threaten to spark industrial action by postal workers, TNT Post is preparing to increase its presence in the area with a further 50 vehicles before the end of this year. TNT Post is expected to handle twice as much mail this year as last, and pressure on Royal Mail to retain and win back business has never been higher. With its monopoly status already eroded by an EU-driven plan to break the back of state-owned postal services, Royal Mail urgently needs to simplify and restructure sorting. Its immediate plans are to set up a central hub in Warrington which could see sorting centres in Liverpool, Crewe, and other locations in the area, shut for good.
Steve Lawson, editor for Hellmail, the postal industry news site said:
"Royal Mail still has the monopoly on postal services in the UK, but there is little doubt that this is changing rapidly. The decline in stamped mail coupled with lost revenue through the introduction of downstream access where rivals can sort mail but use Royal Mail to deliver it, is having a marked effect on Royal Mail's position in the UK postal market, and its revenue."
Clearly it recognises those pressures. Initially it was around a fifth of business that was being lost to competitors, now I believe its over a quarter and there are unconfirmed reports that Royal Mail is losing a substantial amount of money every week – possibly as much as a GBP 1m a week. That means that it has little option but to cut out facilities that no longer reflect the volume of mail it is handling and automate as much as it can – in line with the type of sorting operations being carried out by rivals. You can't compete with the motor car using a horse and cart, and much of Royal Mail's structure extends from an era when it was the only kid on the block. That has now changed." he said.
The proposed closure of key sorting centres in places like Liverpool has sparked fury from the communication workers union which says Royal Mail is pushing through changes without consultation and that Royal Mail's plans would see job losses. Conversely, Royal Mail argues that existing centres are badly sited, too small to accomodate high-speed sorting equipment, and no longer suit the needs of a more modern postal service.
Royal Mail has already secured a substantial modernisation grant from the government which has seen the introduction of PDA scanners to put it on a level-footing with other carriers but Royal Mail is struggling to compete on sorting with outdated equipment and urgently needs to centralise mail centres and install modern sorting machinery.
TNT hopes to increase revenue in the area by GBP 33m and is already trialling postal deliveries on foot in Liverpool, reason perhaps why Royal Mail is concentrating its efforts on steamlining its operations in the north-west. Royal Mail said that changes to its distribution network were on an ongoing basis and were being phased according to need and not based on a grand master plan to strip out mail centres universally. Other mail centres including Coventry and Reading have also been earmarked for closure with operations to be transferred to new high-capacity mail centres near or alongside key motorway routes.
Steve Lawson said:
"With traffic volume an additional consideration, some of these sorting centres are a nightmare to get in and out of and EU speed restrictions on lorry speeds that came into force this year have already impacted on deliveries. Many of us are experiencing delivery times that extend well into the afternoon and that is bad for business however you look at it. There are also indications that the UK is in recession and that too will have an impact on the mail business."
"If TNT or DHL are able to outdo Royal Mail on delivery times as well, and have the infrastructure to compete in large cities, and TNT looks on track for that in the north-west, even more of Royal Mail's business will be lost. Royal Mail workers in these towns and cities have every right to be concerned about their futures but given the continued drive by Postcomm and the government to increase competition by whatever means, I'm unconvinced that trying to hang on to out-dated mail centres with ever-decreasing business will actually save them or jobs."
"The market is undergoing enormous change and will continue to do so. Royal Mail has to respond to that. Certainly TNT Post's growth is relatively small in comparison to the scale of operations carried out by Royal Mail as a whole, but its growing and the combined weight of rivals such as DHL and UK Mail eating into Royal Mail profits is not going to go away." he said.
