Consignia signs key deal with US Postal Service

CONSIGNIA, the embattled owner of the Post Office, will today announce a key contract with the US Postal Service to handle all its airborne parcels from the US to Europe.

The deal will mean that all US airborne packages will go through Consignia’s network of European parcel companies, starting at its hub in Amsterdam, rather than going to individual countries. Consignia owns, or has stakes in, parcel businesses in 30 European countries and is promoting them as the first large integrated European parcel network.

The US Postal Service, the largest exporter of mail in the world, will send 1.6 million parcels and express delivery documents through Consignia’s network annually for a fee of several million pounds. Transatlantic airborne packages tend to be business, time-sensitive items rather than person-to-person parcels which will largely go by sea.

Consignia hopes that the US deal will encourage other countries to consider its network for an integrated European service. The loss-making group has spent Pounds 500 million in the past three years building up an international parcels operation. However, Parcelforce, its domestic parcels business, is in trouble and unions have been warned that it might have to close or be sold if 75 per cent of employees do not become self-employed.

Consignia is also in talks with unions over job cuts of up to 30,000 across its operations, which include Post Office Counters and Royal Mail. The group, which lost Pounds 281 million in six months last year, is attempting to make cost savings of Pounds 1.2 billion in an effort to restore profitability and become more competitive. It is trying to reach an agreement by January 20, although this deadline will be extended if the talks are making progress.

(c) Times Newspapers Ltd, 2002