TNT seeks end to curb on delivery of letters

TNT Post has called for the removal of barriers that prevent it from rolling out its own network of postmen and women, ahead of strikes that threaten to paralyse the postal service in the UK, reports the Financial Times. The article continues:

The call underscores the fragility of the state-owned monopoly as Royal Mail workers press ahead with plans for nationwide industrial action on Thursday and Friday.

A backlog of 30m letters is already stuck in the system, with cheques, invoices and goods delayed at a time when the economic recovery is nascent.

Nick Wells, chief executive of TNT Post, the Dutch-owned mail group, said he was keen to provide a rival service if he could make it financially viable. “It’s a shame that there are barriers in the market that have prevented us from offering a real alternative. The past couple of weeks have been our busiest ever.”

Postal operators such as Business Post, which runs UK Mail, and TNT Post have won a third of the market for collecting and sorting mail.

But they still rely on Royal Mail for the final delivery of letters, meaning they are unable to prevent large disruption.

Amazon and Argos are among retailers said to be making contingency plans for the strike, with private postal companies such as TNT Post reporting unprecedented inquiries for their services. Although they are forced to rely on Royal Mail staff for the “last mile” delivery, their post arrives at its centres ready sorted, so tends to be delivered first when the strikes come to an end.

TNT Post has been trailing a “final mile” delivery service in Liverpool for the past 18 months but like other operators, such as Deutsche Post, has found it financially unviable. Royal Mail is exempt from paying value added tax – an advantage its competitors see as unfair and which many believe has blocked the emergence of the type of competition in delivery services seen in some other European countries.

Wells said TNT would be unlikely to roll out a service nationwide so long as “there wasn’t a level playing field”. The trial was being carried out “to understand operational issues” in the hope that the rules on VAT would be reformed in the near future. The company has taken its case on VAT to the European Court of Justice and is waiting for a decision.

“We are, of course, working to redress both these barriers and when we do we remain committed to putting orange postmen on the streets and delivering choice to our clients for the final mile as well,” he said.

A Royal Mail spokesman said the postal market was “open to competition”. “Rivals are taking an increasing share of the market and this affirms our need to modernise the service.”