Tag: Royal Mail

Dunne: Royal Mail pricing proposals set to hit rural areas the hardest

Posted by | Jul 12, 2007 | |

Philip Dunne, MP for Ludlow, today criticized Royal Mail’s plans to charge large postal customers higher prices for delivering bulk mail in rural areas.

It has been calculated that 80 pct of households and 90 pct of postcode sectors in the Ludlow constituency are in the area Royal Mail considers the most rural. These areas will attract the biggest surcharges.

Royal Mail’s proposals are to increase prices by over 10.2 pct for bulk mail deliveries in rural areas while prices in urban areas rise by only pct%.

The rural surcharge proposals for large mailings raise damaging implications for rural postal services and rural communities:

– Mail volumes going to rural areas will decrease and the unit costs of deliveries will increase;
– This in turn will put pressure on Royal Mail to reduce services in rural areas in the future;
– Rural post offices involved with mail delivery will see a declining volume of mail handled placing them in even greater jeopardy and;
– Significant additional costs will be placed on rural business and organizations.

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Royal Mail criticized over pricing

Posted by | Jul 11, 2007 | |

The Royal Mail has faced criticism from the British Chamber of Commerce (BCC) after their Pricing in Proportion initiative is shown to raise costs for small businesses.

60 pct of businesses participating in a survey conducted by the BCC stated that their postage costs had risen because of the change in pricing. Only 16 pct felt that Pricing in Proportion (PiP) had simplified the system, and fewer than 1 pct believe that it is an improvement on the previous pricing scheme.

The PiP system was designed to be a revenue neutral exercise for the Royal Mail, basing costs on the size of mail as opposed to weight, reflecting the expense of handling larger pieces of mail. The survey indicates that PiP has failed to simplify the system for customers, and has even raised postage costs for some.

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TNT uses strikes to put pressure on Royal Mail

Posted by | Jul 11, 2007 | |

TNT said the wave of industrial action hitting Royal Mail underlined the need for it to develop a full-blown rival service.

The Dutch-owned company, which uses Royal Mail to provide “final mile” postal delivery, said its customers were suffering disruption from the action by the union but it would not be suing the Post Office because it accepted that the state-owned group was protected by “force majored” contractual clauses.

TNT is the only company known to have been developing concrete plans to launch a complete rival service including the use of its own postal delivery staff. Its British boss, Nick Wells, said the impetus to proceed with such a project was higher than ever.
TNT has been undertaking full-scale trials of next day door-to-door deliveries in Glasgow and Manchester although the vast bulk of its daily mail is distributed to homes through Royal Mail under the specially licensed “final mile” system used by several private operators.

TNT’s group chief executive, Peter Bakker, said recently that Britain was one of its most important markets, showing healthy growth. The company is distributing more than 1 billion items of mail a year in the UK and many customers have migrated from Royal Mail, including telecoms group BT, which recently signed a contract worth up to £ 90m.

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Business Post steps up pressure on Royal Mail

Posted by | Jul 10, 2007 | |

Business Post, the postal services company, said its turnover had risen 13 per cent in the first quarter of 2007 compared with the same period last year.

In an interim management statement ahead of Tuesday’s annual general meeting, the company said its struggling parcels business was “making progress in an increasingly competitive market” while other parts of the business were performing strongly.

Business Post’s parcels contract with Federal Express, worth about GBP 20m in revenue and GBP 2m in operating profit, was terminated on April 30. If the revenues from this contract were excluded, the company’s underlying revenue increase for the first quarter would have been 18 per cent, the company said.

More than 10 per cent of the 20bn items posted each year in the UK are now handled by private sector contractors. Business Post handles more than one in 20 letters posted in the UK.

Business Post said it had managed to minimize the disruption caused by the Royal Mail strike at the end of June.

The company said when it announced its full year results in May that it had more than doubled revenues of its UK Mail operation in the year to March 31 2007 to GBP 90.3m, following the full opening of the letters market to competition at the start of last year.

In May, the company said its operating profit from UK Mail also doubled from GBP 3.2m to GBP 6.4m after investing a further GBP 4m to increase sorting capacity.

The group’s turnover was GBP 325.6m in the year to March 31, compared with GBP 278.2m the previous year, and profit before tax was GBP 9.8m compared with GBP 4.7m the previous year.

Tuesday’s statement contained no information on the company’s expected profits or dividends.

Business Post now has more than 400 customers, including Prudential, which the company won in June, the BBC and the Department for Work and Pensions.

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Royal Mail faces threat of watchdog censure in battle over prices

Posted by | Jul 9, 2007 | |

Royal Mail is facing action from the postal regulator after a complaint from DX, one of its rivals, that it had breached pricing regulations.

Postcomm is due to make a formal ruling in the next few weeks, but the regulator has already outlined concerns over a new service that operates in DX’s area.

As the dominant incumbent, Royal Mail is not allowed to lower its prices selectively because that impedes emerging competition. Instead, if it lowers prices it has to offer those prices to everyone. DX argued that it had circumvented this by creating a new service and arguing that this served a niche market, rather than a broad one.

Last year Royal Mail was fined GBP 1 million by Postcomm for failing to ensure that it did not gain an unfair commercial advantage over its competitors in the “access to the last mile” market.

The move came after complaints from three of Royal Mail’s competitors at the time – Express, the dairies business, TNT and UK Mail – who said that they had been hampered in getting uniformly priced access to the final-mile delivery, which is carried out by Royal Mail postmen.

Two years ago the regulator found that Royal Mail’s advertising had breached competition regulations.

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