Bid to open up bulk mail market in Channel Islands

Regulators in the Channel Islands look set to grant licences to two postal operators to provide new mail services to continental Europe. The Channel Islands Competition and Regulatory Authorities (CICRA) issued a notice this week of its proposal to licence TNT Post (UK) Ltd and Hi-Speed Freight Services to launch mail services sending packets and large letters to continental Europe and Ireland.

The new services would not be for sending items to the UK, Isle of Man or within the Channel Islands.

CICRA said a review of the postal market in the island of Jersey, carried out on behalf of ministers, had suggested there was demand from bulk mailers in the fulfilment industry for more alternatives in sending mail more quickly to the European market.

The Authorities’ executive director, John Curran, said the review had taken account of the pressures facing the local fulfilment industry considering the potential abolition of the low value consignment relief (LVCR) into the UK.

The LVCR had allowed mail order firms and e-commerce companies to avoid VAT on the sale of low-value products like CDs and DVDs into the UK when basing fulfilment operations in the Channel Islands. The UK government intends to end the LVCR from April.

CICRA said bringing extra competition into the local mail industry could help lower shipping costs and help Jersey’s fulfilment industry to compete.

“The fulfilment industry in Jersey is under extreme pressure with the abolition of LVCR and the creation of new markets for bulk mail is imperative,” said Curran. “The evidence suggests that there is demand for better postal links to the European market.

“The proposal to licence these two operators will help to better serve these markets and may help the bulk mail sector remain competitive and remain based in Jersey.”

CICRA did not extend TNT Post and Hi-Speed Freight’s licences into serving items going to the UK, Isle of Man or within the Channel Islands as it said Jersey Post could satisfy demand for these services.

The loss of the LVCR is also likely to affect Jersey Post’s bulk mail volumes, but Curran said the Post’s projections were that it would remain profitable in 2012 even without its bulk mail business, thanks to cost-cutting and “modest” price increases.

However, the CICRA executive director said the licences for TNT Post and Hi-Speed Freight, effective February 24 unless objections are received, would mean “significantly” improving the quality of bulk mail services to Europe.

“We see opportunities here for Jersey’s bulk mailers to expand into the European market which would go some way towards offsetting the potential abolition of LVCR,” said Curran.