Tag: Royal Mail

Royal Mail mess

Posted by | Aug 12, 2007 | |

Horror stories about the state of Royal Mail abound. But there is a good chance that these tales are not circulating in the form of a letter, stamped and mailed at a post office. That loss of market share lies at the heart of Royal Mail’s problems: its operations are a shambles – not entirely its own fault – and the company is facing ever more competition it is not equipped to handle.

Good news, then, that after weeks of sporadic walkouts, the Communication Workers Union – a bastion of resistance to modernization – has called off further scheduled strikes and sat down with management to reach a deal for 130,000 employees.

In these negotiations, both sides need to understand the two kinds of competition Royal Mail faces: digital communication technologies and more digitized competitors.

Every day, Royal Mail sorts millions of letters by hand and rewards its staff handsomely for the trouble: on average, its employees earn 25 per cent more than their colleagues in private companies. But it is also 40 per cent less efficient than the automated competition.

Reforms need to come fast. Today, one in five letters is handled by competitors. These private delivery services mainly focus on profitable business such as large corporate delivery contracts. If Royal Mail does not modernise its operations soon, it will be left with only unprofitable parts of its operations.

Regulators need to give greater clarity about which aspects of the business they consider a public service. That should help Royal Mail to avoid cross-subsidizing its work as a utility with income from profitable units. Flexibility should extend to price-setting as well. Royal Mail needs to be able to raise prices in smaller steps and at greater frequency.

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E-mail overtakes print for marketing offerings

Posted by | Aug 12, 2007 | |

The volume of marketing offers sent by e-mail has overtaken print direct mail in the UK for the first time as com­panies exploit the low cost and other benefits of electronic campaigns.

The milestone highlights the challenge to Royal Mail and others with sizeable businesses charging for producing and delivering print direct mail when advertisers are reducing print volumes in the GBP 14bn-a-year industry.

Latest figures from the Direct Marketing Association estimate that in the fourth quarter of 2006, commercial e-mail volumes increased by 50 per cent year on year.

The electronic format was heavily adopted by retailers e-mailing vouchers in the run-up to Christmas and that is likely to be repeated this year.

Specialists questioned by the DMA predicted the volume of e-mail marketing would grow by another third.

Most marketers however believe a combination of print and online is the most effective approach, particularly as campaigns can be confused with spam, which is estimated to account for up to 90 per cent of internet traffic.

A new study from Royal Mail found customers prefer to receive both mail and e-mail in different contexts, and spend more if communicated with by both methods.

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Death of the morning post for 60 pct of Britain

Posted by | Aug 11, 2007 | |

Almost two-thirds of homes and businesses will be condemned to afternoon deliveries under fiercely contentious Royal Mail plans.

The proposal, hidden away in a consultation paper, signals yet another downgrading of a once first-class postal service.

The Post Office has been accused of ‘attempting to charge first class prices while delivering a second class service’

Currently, 94.4 per cent of homes and businesses receive their mail before noon, with deliveries as early as 7am for many.

Under the new plan, no one would receive anything before 10.30am, while 60 per cent would have to wait until after midday.

The industry regulator Postcomm has indicated it supports the move, but there is still time for the public to make its voice heard before the consultation ends on August 28.

However, while the company is planning to phase in the changes before the Christmas rush, the directive does not come into force until January.

Royal Mail is under no legal obligation to ensure deliveries are made before noon even though research shows the overwhelming majority of consumers values such a target.

The consultation document says the plan would be to “shift the peak in residential deliveries between 10.30 am and 2 pm”.

An accompanying graph shows there will be no deliveries before 10.30am. Ten per cent would be delivered by 11am, a further 10 per cent by 11.30 am and a further 20 per cent by noon. The graph suggests the rest would arrive by 2.15 pm.

Royal Mail claims that maintaining the current scale of deliveries will cost GBP 280 million by 2009/10 and require an increase in the cost of stamps to pay for it.

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Regulator to let Royal Mail raise price of 2nd class stamps by 17 pct

Posted by | Aug 10, 2007 | |

Royal Mail has been given the go-ahead to increase the price of a second-class stamp to 29p by 2010 but has been told by the postal regulator it must get its act together in order to remain competitive.

Postcomm said that the ball was now firmly in Royal Mail’s court “to address urgently its very high cost base”.

The regulator said it is giving all the help it can to enable Royal Mail to “tackle its deteriorating financial situation” and said that “reining back on competition” was not the answer.

Royal Mail asked Postcomm in March to review prices as it struggles in the face of competition from TNT and UK Mail in an age when email has broadly replaced the letter for personal correspondence. Postcomm had previously said second-class stamps could rise from 24p to 26p.

TNT and UK Mail had also requested Postcomm to look at “access mail”. This is when Royal Mail delivers letters “the final mile” for operators who have already collected and sorted the letters and carried them across the country. TNT and UK Mail believe the prices they pay are too expensive while Royal Mail believes it is too generous.

Postcomm rejected requests to change the status quo and said prices are overall “set at a fair level”.

Royal Mail and the Communication Workers Union have committed to reach an agreement by 4 September.

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True picture is stuck in the post

Posted by | Aug 9, 2007 | |

For an organization desperate to be seen as more efficient and business-like, Royal Mail seems to be displaying a cavalier attitude to its ultimate backers – its customers and the British taxpayer. Any listed company that delayed its annual report for three months for no stated reason would be treated with impatience if not downright suspicion.

For Royal Mail, the time lag is even more egregious because it doesn’t publish its financial results separately. The annual report is the first chance to gauge the health of the company.

While the regulator PostComm says it has been given the entire document, the same courtesy has not been extended to either Parliament, customers or the media. Royal Mail won’t explain. It may just be that the GBP 4 billion refinancing of the business has injected major complications, but that should not have had any impact on the relevant reporting period.

There are two theories about the delay. One is that it is to suppress embarrassing management bonuses during the current industrial dispute, which is partly over staff pay. The other is that the bottom line is rather healthier than management would like known at a time when it is seeking to keep the annual staff pay rise this year to 2.5 per cent.

Neither is a legitimate reason for burying the news, bad or good. The series of rolling strikes is producing real pain by hitting companies’ cash flow.

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