Year: 2006

Message to ministers: Future of Royal Mail requires judgment of Solomon

Royal Mail’s letters business is a conundrum. A state-owned organisation operating in a free market. Charged with making profits but obliged to offer a universal service delivering to 27m addresses six days a week. The competition wants to dig deep into its market share and for a year has had the freedom to do so. Top management wants to open up the share capital to the workforce – a proposal that leaves the government facing a judgment that would stretch Solomon.

Yesterday regulator Postcomm delivered its verdict on the first year of liberalisation of the 80m letters-a-day market which has pitted the 350-year-old monopoly against almost 20 challengers. The conclusion? So far, so good – but it’s not going to get easier. Price sensitivity, alternatives such as email and the need for innovation mean tough times for the industry as a whole, while Royal Mail also faces the need to adapt and invest.
According to Postcomm the introduction of full-scale competition has given postal service users greater choice and lower costs and has spurred Royal Mail into dramatically improving its service.

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TNT UK aims for final-delivery business

Orange-clad postal workers are expected to hit the streets next year, putting the state-owned Royal Mail under pressure.
TNT, a subsidiary of the privatised Dutch postal group, says it wants to send postmen and women wearing orange uniforms – TNT’s corporate colour – out to deliver mail to homes and workplaces in selected cities.
The company already handles more than 5 per cent of UK mail, through contracts with business customers to collect and sort their post before handing it overfor delivery by Royal Mail under so-called “downstream access” arrangements.
Nick Wells, chief executive, said the company had adopted a dual strategy of using downstream access while developing its own collection and delivery service.

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Opening up the UK market appears to have been positive for all concerned

One year after the introduction of full competition in the UK’s postal market, everyone appears to be a winner.

Customers are benefiting from record levels of service and big business mailers are enjoying substantial savings in costs.

Eighteen new postal operators have been licensed and have seized a bigger share of the market than the regulator expected, handling more than 10 per cent of the mail.

Royal Mail remains the dominant force in the industry despite losing its monopoly. Its competitors hand over most of the mail to the state-owned operator for final delivery, leaving it with 97 per cent of postal revenues.

Postcomm, the postal regulator, declares itself pleased with the progress made so far. “Royal Mail has really raised its game, especially on quality of service,” says Richard Moriarty, deputy chief executive. “And the competition has brought a range of new business models, with operators offering different ways of doing things, such as later collection times and guaranteed delivery.”

The state-owned operator is on course to meet all 12 of its performance targets for the first time in the 2006-07 year – these require it to deliver 93 per cent of first-class mail on the next working day and 98.5 per cent of second class mail by the third working day. Two years ago, only four of the targets were hit.

The greatest benefits have accrued to the biggest mail users, which include banks, utilities, local councils and charities. Businesses account for 87 per cent of the more than 20bn items sent each year, with 500 companies providing half of all mail volumes.

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DHL Romania sees 2006 turnover up 21 percent

DHL Romania, the local branch of U.S. delivery company DHL, expects its turnover to grow 21 pct on the year to over 20 mln euro (USD26.33 mln) in 2006, the company’s commercial director Bogdan Obretin said on December 29, 2006.

The company reported a turnover increase of 21 pct year-on-year for the first three quarters of 2006 due to consolidation of its position as supplier of complex logistics solutions, Obretin said.

DHL Romania competes in the country with international delivery companies TNT Romania, a subsidiary of Dutch TNT Express, Couriers Service, an authorised representative of U.S. delivery company UPS and U.S. Fedex, as well as domestic companies Fan Courier, Cargus, Alo Curier, Concorde and Pegasus.

[Editor’s note: The Romanian market for courier and international delivery services is seen growing 30 pct on the year to 130 mln euro (USD171.13 mln) in 2006, and further increasing at an annual pace of 25 pct to 50 pct over the next two or three years, the Romanian News Digest said on January 10, 2006.]

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Norway Post too slow

A test of Norway’s postal service Posten revealed that their service falls far short of requirements.

Posten’s license conditions demand that they deliver 85 percent of all post by the day after a letter is sent. A recent test of 342 letters showed that the company only manages to get half of letters sent to their destination on time, newspaper Nationen reports.

The newspaper’s test found that one of the letters went missing, one took a week to arrive, and only half made it to their target in Norway the next day.

The Posten’s information chief Robert Morberg had no excuses to offer.

“We apologize. This is not how it is supposed to be,” Morberg said.

Morberg said that the results were due to problems with changes resulting from the company having gone over to using their own freight planes, and that ongoing measures were steadily improving results.

Nationen carried out the test using 19 persons, a combination of mayors and associates of the newspaper, sending 19 letters to each other. Northern counties Finnmark and Nordland had the worst delivery record, with Askim and Oslo posting the best results.

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Postal department, BSNL to set up ATMs in rural areas in India

The Department of Posts (DoP) and the government-owned Bharat Sanchar Nigam (BSNL) will jointly put ATMs in rural areas across the country. In rural areas, post offices will be used as sites for providing towers. BSNL will also use services of postmen for collecting telephone bills in the remote areas.

This is part of an agreement signed on Thursday between BSNL and the DoP. The agreement also envisages that BSNL will use postmen as mobile PCOs. BSNL will provide wireless in local loop (WLL)-based mobile telephones to the postmen. When a postman goes to a village, he can carry a mobile phone with him. There will be a meter attached to it. People can use mobile PCOs and pay the postman.

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‘The charmed generation’: UK businesses recognising a unique market worth GBP1 billion

UK businesses are waking up to the value of the Charmed Generation, a group of two million over 55 year olds with the highest disposable income of any other consumer age group, it was revealed today.

Research from Royal Mail and 20plus30 Consulting has estimated the net capital worth of the Charmed Generation is GBP1 billion – a level of wealth for over 55 year olds that will not be repeated in future generations.

Royal Mail statistics show that ‘The Charmed Generation’ has the highest response rate to direct mail (over 16 per cent) of any group of consumers. Forty two per cent of this age group have said that in the last six months a mailing enticed them to become a new customer of a company and 48 per cent said a mailing had encouraged them to buy from a company they already use, indicating high levels of brand loyalty.

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Postcomm issues new licence to DHL Global Mail (UK) Limited

Postcomm has today issued a new licence to DHL Global Mail (UK) Limited, to come into effect on 1 January 2007. DHL Global is the new name for Mercury International Limited, with the change also taking effect from 1 January 2007.

The licence takes into account the requirements of the new licensing framework that came into force on 1 January 2006.

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