Royal Mail fears exodus

The exodus of big business from the Royal Mail could see as many as one in five letters being handled by competitors such as Dutch group TNT and the UK Mail arm of courier group Business Post, it has emerged.

Senior Royal Mail executive Stephen Agar has admitted latest figures show that about 12.5% of the post was lost to the competition last year.

But with major customers continuing to ditch the Royal Mail at alarming rates, Agar said that figure could rise to 20%.

The defection of companies with major bulk billing operations to Royal Mail’s rivals has become increasingly embarrassing for the former state postal monopoly.

Earlier this year, the £8m-a-year BBC TV licensing operation took its postal needs to UK Mail, following an earlier decision by the Department of Works and Pensions to switch its £12m-a-year contract to the same operator.

That followed the decisions, recently revealed by the Evening Standard, of BT and British Gas group Centrica to move to TNT for their mail needs, together worth GBP 150m over three years.

Most of the mobile phone companies, banks and utilities have also decided to quit Royal Mail, citing price and quality of service.

Royal Mail chief executive Adam Crozier, pictured, today defended the business’s ability to handle competition.

‘We’ve gone through the process [of market liberalisation] that BT went through over 25 years,’ he said. ‘We’ve concertinaed it into three.’