The Postal Market for the future” by Lorna Clarkson, Commercial Director, Royal Mail – The Postal Markets for the Future conference
Read More“Retail Zonal Pricing” by Nick Wells, CEO, TNT Post UK Limited – The Postal Markets for the Future Conference
Read MoreThe Communication Workers Union is poised to call a series of one-day strikes unless Royal Mail reopens talks over its pay and modernisation proposals.
The union’s postal executive will meet tomorrow to discuss its tactics after a ballot of 127,000 members voted overwhelmingly last week in favour of industrial action. If a strike does go ahead it will be Royal Mail’s first national stoppage for more than a decade. The union will have to give seven days’ warning of any action.
Yesterday Royal Mail said it was prepared to talk but held out little prospect of an improved offer. “If the union want to meet we are very ready to meet,” said a spokesman, adding: “We have offered all we can afford.”
The union has rejected Royal Mail’s offer of 2.5%, plus a potential bonus and productivity payment, and is also opposed to the company’s modernisation programme which it claims would mean the loss of 40,000 jobs over the next five years.
Royal Mail insists it must invest up to GBP 1.25bn in modernisation, particularly to increase automation of postal sorting, to compete with private-sector rivals.
It estimates that by the end of this financial year, one in five letters will be handled by competitors, although the company will still deliver much of that mail under so-called access agreements.
Today Nigel Stapleton, the chairman of industry regulator Postcomm, will call for Royal Mail to make greater use of innovation rather than on concentrating on competing on price.
Read MoreDebate at Postcomm’s fourth annual industry forum over Royal Mail’s application to apply what it calls zonal pricing to some business mail products has illustrated the strong feelings and diverse views on the subject.
Royal Mail has applied to Postcomm to charge large mailers – using products which are not part of the Universal Service – different prices depending on where in the UK their mail is delivered. Today’s workshop was held as part of Postcomm’s consultation process for this application.
In advance of the workshop, a Royal Mail spokesperson said “the one-price-goes-anywhere universal service to the UK’s 27 million addresses is open to every customer and we have urged the regulator to agree that this service should be focused on stamped mail.”
For business customers, Royal Mail “believes where strong competition and customer choice is already well established, Postcomm should let the market decide on prices. That means allowing Royal Mail to introduce zonal pricing for bulk business mail – if business customers want it. Zonal pricing is already available and being used by Royal Mail’s access customers where prices can already vary if the mailing is for high or low density areas.”
Representatives from Postwatch, the customer watchdog, asked why Royal Mail “is proceeding with zonal pricing, an initiative that has received no customer support whatsoever”. Highlighting the potential impact on customers, and the wider postal market, Postwatch identified significant features, both positive and negative, within Royal Mail’s proposals concluding that the time was “not right to change to such a pricing structure”. Postwatch also urged customers to respond to Postcomm stating their opposition to the proposals to support “the fact that this change will be unreasonable for users of the service”.
Read MorePostcomm’s 2006/07 annual report published today covers the first full year during which two significant Postcomm policy initiatives took effect: Royal Mail’s long-standing monopoly of the mail market was removed completely at the start of 2006 and a new four year price and service quality control came into effect on 1 April 2006.
Royal Mail still has a virtual monopoly over the final mile with less than 1% of the mail now being delivered end-to-end by rival operators. However, ‘access’ competition has developed to a more significant extent. Currently nearly a quarter of bulk business mail is collected from the mailer by rival operators and handed over to Royal Mail for delivery ‘the final mile’. More than 70% of the total revenues in this access competition structure are retained by Royal Mail.
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