Tag: Mail Services

Funding from the private sector will help Royal Mail deliver a valued universal service (UK)

Posted by | May 14, 2008 | |

Postcomm said that a universal service that is financially viable and safeguarded for the future is most likely to be achieved through a radical transformation of the governance and structure of Royal Mail.

Postcomm concluded in its first submission to the independent review of the postal market that Royal Mail’s current business model is unsustainable and that, unless some bold actions are taken very quickly, it is highly likely that its letters business will move to a position of managed – but accelerating – decline.

In its second submission Postcomm says:

– With the mail market now in structural decline, because of the increasing impact of e-mail and the Internet, Royal Mail needs access to private capital and a stronger set of incentives to enable it to restructure and become more profitable;
– Partnerships with the private sector, such as we are seeing in some European countries, could serve as a catalyst to more rapid transformation and greater efficiency from the universal service provider;
– As competition develops in segments of the market, it can replace regulation as the force which protects customers’ interests. This – and the need for much more transparency about the costs of Royal Mail’s business – will be a major theme of Postcomm’s proposals for the regulatory framework post April 2010;
– The transformation of Royal Mail will ensure a more dynamic mail market that can respond quickly and effectively to changing customer needs as mail increasingly is challenged by electronic media.

Postcomm believes competition and liberalisation should continue to be promoted as they are delivering far better customer focus and strong incentives for all mail operators to innovate and to become more efficient. Competition has already benefited large customers, and choice is now becoming available to smaller businesses. The regulator also urges the removal of artificial barriers to postal market entry – including the removal of new entrants’ VAT disadvantage – which could encourage wider competitor involvement in the collection, sorting and delivery of mail.

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Economy and Internet challenge U.S. Postal Service

Posted by | May 14, 2008 | |

Despite a slowing economy and growing competition from the Internet, the U.S. Postal Service aims to break even in 2008 by increasing its package delivery business by about 10 percent, a top executive told Reuters on Wednesday.

The Postal Service will eventually be profitable, but that goal must be balanced against giving customers the best price possible, said Patrick Donahoe, the chief operating officer and deputy postmaster general.

This year, the Service expects about 10 percent growth in Priority Mail, Express Mail and related products that compete with Fedex Corp, United Parcel Service and other companies, Donahoe said. That group of products now makes up about one-tenth of the Service’s business, with First-class mail and periodicals accounting for the rest, he said.

To attract more business from small companies, the Service began offering price discounts to high-volume Express Mail shippers and commercial Priority Mail customers on Monday. The discounts were made possible by a 2006 law giving it more freedom to customize pricing of package delivery products.

As the Postal Service attempts to enhance its package business, the slumping economy has cut revenue below expectations.

With businesses sending less mail, the Service lost USD 707 million in its fiscal second quarter as mail and package volume fell 3.3 percent. During the first half of its fiscal year, the Service reported a net loss of USD 35 million while generating USD 39 billion in revenue.

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Semi-private Royal Mail?

Posted by | May 14, 2008 | |

The Postal Regulator is calling for Royal Mail to be partly privatised.

Postcomm is making the highly contentious proposal – which could lead to Royal Mail being owned in part by a private-equity firm – to an independent review on the future of postal services that has been set up by the government.

It says that Royal Mail’s financial difficulties are likely to worsen considerably, without the injection of private-sector capital and management expertise into the state-owned business.

Nigel Stapleton, the chairman of Postcomm, has warned in an interivew with me that in the absence of part-privatisation the government may be required to inject a big new subsidy into Royal Mail, which it won’t wish to do.

The risk of not bringing in the private sector or a subsidy would be a significant deterioration in the quality of Royal Mail’s service under its obligation to deliver letters to and from anywhere in the UK at a uniform tariff, he said.

Only last week Royal Mail announced that it had made a loss on providing this so-called universal service for the first time. Royal Mail estimated that the loss for the last financial year on this its core activity was GBP 100m.

The government will find it hard to dismiss the suggestion out of hand, especially since analysts believe the independent review led by Richard Hooper is expected to come to the same conclusion.

However the Prime Minister is likely to be irked that such a divisive issue is being forced back on to his agenda.

Privatisation in any form, whole or part, is strongly opposed by the CWU, the main postal workers’ union – which is also a leading funder of the Labour Party.

The CWU’s opposition is shared by many Labour MPs.

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Understanding the postal needs of small businesses (UK). L13982

Posted by | May 14, 2008 | |

The UK’s 4 million small and medium sized enterprises (SMEs) are an important sector – rightly described as the engine room of the economy. This sector has, however, been largely ignored in terms of developments in their postal services since competition was introduced. The competitive battle ground has, until now, been tightly focussed on winning the business of the bulk mailing companies.

Postwatch, the watchdog for postal services, commissioned RS Consulting to research the way SMEs both use the postal services and how they could see them changing. Postwatch has today published on its website the results “SMEs’ current and future postal needs”. Visit www.postwatch.co.uk/research to see the report.

Speaking at a Postcomm seminar organised to discuss last year’s strike action by Royal Mail employees Millie Banerjee, CBE, Chair of Postwatch said; “The research Postwatch publishes today highlights that as well as their ‘sending’ needs SMEs also rely heavily on the mail they receive. For these businesses the cheques really are in the post and they want them delivered as early as possible. They also want there to be a significant gap between the daily delivery of post and the last collection of the day, so that they can respond in day.

“Last year’s strike action would have been very worrying for many small businesses. If it had continued some small businesses may have struggled to recover. Royal Mail has to find a better way to resolve its disputes.

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