Tag: Royal Mail

Royal Mail's zonal pricing proposals under fire

Posted by | Apr 3, 2007 | |

Royal Mail’s proposals to introduce a more competitive pricing system have been attacked by mail users and postal operators after the industry regulator launched an inquiry.

The state-owned operator wants to introduce a pricing structure for bulk mail to enable it to charge different amounts depending on the destination. This, it says, would help it to cope with mounting competition from private sector operators.

The proposals would mean charging 2.5 per cent more for sending mail to anywhere in Greater London, where costs are 12 per cent higher than the national average. Mail to business districts costs 28 per cent less than average to deliver and Royal Mail is proposing to cut charges 4.9 per cent.

There was anger over the request to charge more for delivering bulk mail inside the M25, which Royal Mail said was necessary to cover higher salaries and the cost of handling congestion.

Alan Halfacre of the Mail Users’ Association said the former monopoly had failed to raise its efficiency in the capital to the level elsewhere in the country.

In its first proposals on zonal pricing, submitted nine months ago, Royal Mail had proposed a 1.7 per cent cut in charges for delivery in the capital. Now it wanted to charge 2.5 per cent more, 4.2 per cent than it had initially proposed – with even larger rises for people living outside built-up areas.

“These increases will en-courage banks, insurers and utilities to move customer billing online. Royal Mail is making itself a problem.”

Royal Mail said its proposals would be cost-neutral, with higher charges in some areas matched by lower prices elsewhere. The cost of sending two-thirds of the mail involved would fall.

But competitors said the move was an attempt to protect the former monopoly from competition by reducing its charges in areas where they could win business.

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Royal Mail may charge extra for deliveries to rural areas

Posted by | Apr 3, 2007 | |

The Royal Mail is planning to charge some businesses more for sending mail to London and remote rural locations so it can cut delivery prices elsewhere in the country.

Officials say charges that more accurately reflect the cost of moving mail through the congested capital and out to the furthest corners of the UK will enable it to provide a better deal to companies wanting to blanket addresses in more accessible locations.

Both the company and regulators underlined yesterday that the charges will make no difference to residents and small businesses sending stamped mail.

The changes – planned for April 2009 at the earliest – will apply to a limited number of firms that send out vast amounts of junk mail, bills, statements, and other business correspondence using certain bulk mail services.

Eyebrows have been raised that Royal Mail finds it as expensive to deliver to London as far off places in the British Isles and the regulator Postcomm is wondering why bosses are so keen on the new price structure when most customers involved have already said they do not want it.

But the higher wages paid to staff working in the capital and the congestion charge are among the arguments for higher charges – although critics say the service would be better improving its efficiency in London.

Under the proposals a certain kind of business in London planning a mailshot on Leeds would be likely to pay 4.9 per cent less for deliveries to a business district and two per cent less to a densely populated area.

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Postcomm to examine Royal Mail request to price bulk mail products by delivery zone

Posted by | Apr 2, 2007 | |

Royal Mail applies to charge higher prices for delivery to London and rural destinations; lower prices elsewhere

Postcomm, the independent regulator for postal services, has today written to customers and operators about an application by Royal Mail 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. Royal Mail calls this ‘zonal pricing’. Postcomm has up to nine months to assess whether, and if so when, this new pricing structure can be implemented.

Royal Mail’s ‘zonal pricing’ application does not affect stamp prices or those bulk mail products that are included within the definition of the universal service. It covers products that generated about 25 per cent or GBP 1.4 billion of Royal Mail’s total regulated revenue in the last financial year.

Royal Mail currently prices almost all its bulk mail products at geographically uniform prices. It says that introducing ‘zonal’ prices would help align prices more closely with its costs. In its application to Postcomm, Royal Mail has divided its 27 million delivery points around the UK into five zones. These are Greater London, other areas of high population and delivery point density, areas of moderate density and rural areas of low population and delivery point density.

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Royal Mail soars to victory in Courier Challenge 2006

Posted by | Apr 2, 2007 | |

Royal Mail topped the courier league for consistently delivering packages on time and at low cost, in a new ranking by Research International.

Rival courier services fell short against Royal Mail’s performance for its Special Delivery 9am and lunchtime guaranteed delivery services.

Early morning service costs averaged GBP 9.46 with Royal Mail, more than GBP 30 cheaper than competitor, TNT, at GBP 40.57. TNT came last for the morning service, leaving them trailing behind other couriers tested.

Royal Mail’s Special Delivery service was also cheapest among rivals for guaranteed next day delivery by lunchtime averaging at GBP 5.05, nearly GBP 23 less than its highest priced competitor.

The results illustrate Royal Mail’s winning combination in performance on promise at the lowest cost compared with its competitors. The five main national couriers were included in the independent study: Business Post, DHL, City Link, Royal Mail and TNT. A total of 2,479 test items were sent.

Test routes were selected to provide consistent transit times, as accepted by EU, Postcomm, DTI, IPC and Royal Mail.

Test items were prepared centrally for consistency too and reflected the most common business items sent by package type, size and weight. Items could not be identified as test items by the courier as senders placed items in each couriers own packaging.

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Postwatch concerned about zonal pricing: who wins?

Posted by | Apr 2, 2007 | |

The postal regulator Postcomm has today started to consult on Royal Mail’s application to price its bulk mail products differently according to where they are delivered. The Royal Mail wants to divide the UK into 4 zones according to the density of delivery points and in addition London where it claims costs are higher.

Postwatch, the watchdog for postal services, will be studying the proposals carefully before responding on behalf of customers. Clearly the implications of introducing zonal pricing need to be fully worked through and fully understood before being allowed.

Postwatch is concerned that there is a real risk bulk mailers will curtail mailing to rural areas and all or parts of London because those areas will attract a surcharge. Not only could this be detrimental to customers and businesses in those areas but it could also have an irreversible effect on volumes. This is at a time when Royal Mail itself is constantly expressing concerns about the decline in the amount of mail it is delivering.

Millie Banerjee, Chair of Postwatch, said: “We are concerned that this second attempt to persuade the regulator to allow the introduction of zonal pricing will be successful. It may pass the test of allowing specific product prices to be more closely aligned to their costs. But it may also result in an unfortunate lose – lose situation, where customers, competing postal operators and Royal Mail itself are all worse off.

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