Royal Mail eyes return to rail for bulk traffic

The UK’s Royal Mail wants to use rail for long-distance bulk mail, but believes the sector cannot provide the consistency needed for time-sensitive shipments.
The decision in June to move time-sensitive mail to road under a new hub-and-spoke system by the spring, saving £90m (t127.8m), was a “complete no-brainer”, Royal Mail chairman Allan Leighton told a government transport committee inquiry.

Quality of service, cost and, most importantly, consistency were all behind the decision, he said.

Paul Bateson, Royal Mail’s director of logistics, accepted the fact that infrastructure provider Network Rail gave high priority to mail trains, but he said when there was a problem, rail could not recover quickly enough.

“The performance of rail goes from 80%-98%, ” he said. “We can’t act on a day-to-day basis to smooth that out.” Leighton also said EWS, the operator running the Royal Mail’s rail service under a £50m a year contract, had been “very difficult” to negotiate with.

“We’re not playing games, ” Leighton said. “We’re still talking to six or seven other rail companies to find a solution.” Graham Smith, EWS’s planning director, denied the company had been taking advantage of a near-monopoly position to make huge profits from the Royal Mail contract.

“The profit EWS makes from the Royal Mail contract is sufficient for us to cover costs and invest in new facilities, ” he said.

“We did not allow them to inspect our books, but we had a number of discussions about costs, ” he added.

But even if EWS did open its books and lower prices, Royal Mail wouldn’t necessarily stay with the railways, Leighton said. “I think it is very difficult to get consistency from the rail network because of its structure, ” he said.

Leighton said Royal Mail’s shareholder, the UK government, demanded that the company be profitable. “We have old railway stock, inconsistent service, empty trucks and slow planes. If you sort that out, the savings are huge.” Mick Rix, general secretary of rail union ASLEF, told the committee that the government had allowed Royal Mail to ride roughshod over government policy. He called for a moratorium until the effect of the changes on the environment and service delivery had been investigated.

Posted: 20/10/2003