Competitive Market Review
A detailed assessment of the current competitive situation in the postal market and the barriers to entry.
P:LibraryPostalPostComm Formal DocumentsCompetitive Market Review Sept04.pdf
Author: Archive
US Postmaster general warns of rate hike if reform bill stalls
The US Postal Service will be forced to seek a double-digit rate increase if overhaul legislation is not passed soon, Postmaster General Jack Potter said Monday. Potter urged the thousands of mailing industry employees at the National Postal Forum to “get up to Capitol Hill” and tell their representatives today that “it’s important to bring a close to this legislative process.” The postal bill has passed the House Government Reform and Judiciary committees, as well as the the Senate Governmental Affairs Committee, but it has not been scheduled for a floor vote in either chamber. Potter reiterated his pledge to hold rates stable until 2006, but said swift passage of the bill is critical for the agency’s financial planning, since it takes about 16 months for a rate increase to go into effect.
Read MoreUK mail watchdog plans speed-up in competition
Postcomm, the regulator in charge of the postal service, is expected to announce that troubled Royal Mail will lose its monopoly far earlier than expected.
Royal Mail has been heavily criticised by the regulator for declining service standards. It missed all 15 of its performance targets covering first- and second-class delivery last year.
However, Nigel Stapleton, new head of Postcomm, has indicated that the watchdog’s change of strategy is not only a response to performance but also the organisation’s lack of flexibility towards its largest customers. Last week he said: “Everything people are saying to me suggests that Royal Mail is not responsive to the needs of its business customers. Its customers need to be offered something else.”
Read MoreUK Royal Mail calls for competition
Royal Mail’s Chief Executive, Adam Crozier, today encouraged the early opening of the mail market provided the regulations which stop Royal Mail competing are removed. “Customers should have a proper choice. Royal Mail believes the market should be opened faster than originally planned as long as restrictions on Royal Mail are removed,” he said. “I am very confident that Royal Mail’s people can succeed in a competitive market. They are more than capable of delivering high quality service to customers. “But the handcuffs have got to come off. Royal Mail wants to see simple, light-touch regulation allowing the company to make an acceptable rate of return on its turnover. Some of our biggest rivals, including the German and Dutch postal businesses, are making returns of more than 20% compared to Royal Mail’s 2.5% return on its day-to-day operations from the turnover in its letters business in the last financial year.”
Read MoreUK Postcomm competition proposals are recipe for white van man postal chaos say Amicus
Amicus the union representing postal managers, has condemned today’s announcement by postal services regulator Postcomm for the full opening of the postal services market to competition as premature and likely to result in postal chaos. The union which represents 14,000 post office managers will be pressing Postcomm to ensure provision of the universal service at a uniform price and to conduct a full review of the impact and effect of competition introduced earlier this year before any further extension of the postal market. Peter Skyte, Amicus’ National Officer for postal services, said: “Postcomm’s proposals for full opening of the postal market to competition in 2006 are premature, given that there has been insufficient time to make any realistic assessment of the impact of the initial letters market opening introduced only a few months ago. As they stand they will also put at risk the universal postal service in Britain and provide the potential for every white van man to chase postal business without adequate safeguards for security, integrity and sustainability of the public postal service. Postcomm must think again.”
Read MoreUK Royal Mail faces deadline in compensation dispute
Royal Mail has until next month to prove it did not short-change business customers seeking compensation for poor service following a row between the company and some of its biggest clients. Nigel Stapleton, chairman of regulator Postcomm, is investigating Royal Mail’s compensation scheme, which has paid out only half the Pounds 70m that customers expected. Under Royal Mail’s new compensation scheme, the state-owned postal group is obliged to make payments to its domestic and business customers if it misses its quality of service targets. Royal Mail missed all 15 of its targets for the year ending March 31 2004, and said last month that it had so far paid out Pounds 16.5m to domestic customers and Pounds 35m to business customers. But, according to calculations by Postcomm and bodies representing mail users, it should be paying at least Pounds 70m.
Read MorePostcomm proposes a faster route to ending UK Royal Mail’s postal monopoly
Postcomm today launched a consultation on a package of measures designed to bring forward competition in postal services, promote greater efficiency and service quality from Royal Mail and make it easier for competitors to enter the market. The proposals would advance Postcomm’s current timetable for full market opening by 15 months to 1 January 2006, provide Royal Mail with an extra nine months to prepare for full liberalisation by cancelling the interim stage of market opening that had been planned for April 2005, safeguard the continuing provision of a universal service for 1st and 2nd class stamped post at a geographically uniform price and set a framework for Royal Mail’s price and service quality control from April 2006. The proposals will also provide more freedom for Royal Mail to offer new, innovative, services to help it compete in the fully liberalised market and give customers more choices, so they can select a postal supplier that meets their service quality requirements and offers innovative postal products.
Read MoreRoyal Mail UK revamp to cause ‘chaos at christmas’
Managers at Royal Mail are warning that the postal service could descend into chaos over Christmas, as the state-owned company gets to grips with its radical overhaul.
A series of changes have been introduced at Royal Mail over the past year as management, led by chairman Allan Leighton and chief executive Adam Crozier, strive to turn the ailing service around.
The most controversial change has been the removal of second deliveries in favour of just one a day. Other measures include cutting back on overtime, reducing night-time postal sorting and axing casual staff. But insiders are concerned that the changes could lead to upheaval during the hectic festive season. Traditionally, the Royal Mail has relied on strong demand for overtime to help fill the breach during Christmas.
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