Many consumers on the continent are worse off, says UK Royal Mail‘s Crozier
Although Adam Crozier, Royal Mail chief executive, accepts that the public are losing patience with the poor performance of the postal service, he points out that consumers are worse off in other countries. “We have the lowest prices and the quality targets are tougher.”
Among western European countries only the Netherlands and Portugal have cheaper stamp prices in the lightest category of post, and in the 50 gram bracket the UK’s price of 28p is the lowest. The cheapest stamp price in Germany is 55 cents (38p) and in France it is 50 cents (34p).
Many UK customers are unhappy at the scrapping of the second daily postal delivery and the arrival of mail later in the day. But in Germany post is delivered between 9am and 2.30pm, while in the Netherlands post can be delivered as late as 5pm.
UK stamp prices are capped by Postcomm, which regulates all mail except parcels, and are rising more slowly than inflation.
Although Royal Mail is no longer loss-making, last year it generated a profit margin of only 2.5 per cent, compared with margins of more than 20 per cent at Deutsche Post of Germany and TPG of the Netherlands. These companies, now trying to break into the UK postal market, were modernised in the 1990s and are publicly listed, and are free to charge more for their services.
Although the German and Dutch postal markets were modernised before the UK, Deutsche Post and TPG remain monopolies while the UK market is starting to open up to competition. Royal Mail is facing competition on business mail services from several companies, and Postcomm aims to liberalise the whole market by 2007 at the latest. There is a European Union directive encouraging competition in postal markets but many countries have been slow to act.
Royal Mail and Postcomm will next month start talks on the next round of stamp price rises. Royal Mail will argue that, if it is to survive the introduction of private sector competition, it will need to put its prices up or at least alter them to reflect its costs. The group has suggested a move to size-based pricing, which will set a price according to the size and shape of an item sent as well as its weight. Royal Mail says this is sensible as light but bulky items cost more to sort by hand than heavy, regular-shaped items that can go through its sorting machines.
