Tag: Royal Mail

Royal Mail a global also-ran, claims rival

Posted by | Feb 27, 2007 | |

Royal Mail has left it too late to become an international business, the chief executive of its main rival said yesterday.

Peter Bakker, head of TNT, the Dutch postal business, said that it would be difficult for Royal Mail to catch up after years of expansion by other operators such as his own company, Fed-Ex and DHL.

Royal Mail has one international business, a European parcels operation, while its rivals are active across large parts of the world.

TNT said yesterday that it would accelerate its moves into developing markets such as China, India and Brazil. The group, which now deals with one billion items of UK mail a year, believes that it can provide infrastructure and mail services as the postal market develops on the back of strong industrial growth. Last year, international businesses contributed 75 per cent of TNT’s EUR10 billion (GBP6.7 billion) revenues.

Royal Mail hit back, saying there was not as much competition in comparable countries as there was in the UK, where the market was fully liberalised.

Mr Bakker also gave warning that TNT could quickly double its UK market share if Royal Mail lost its VAT exemption. The European Commission is investigating whether it is permissible for incumbent mail operators to be exempted from VAT by their governments when rivals have to charge the tax.

Mr Bakker said that TNT would be able to secure more lucrative contracts if it were able to compete on level terms with Royal Mail.

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'Big Brother' clocks in at the Royal Mail

Posted by | Feb 25, 2007 | |

The Royal Mail, which earlier this month revealed an 86 per cent plunge in profits, is spending hundreds of thousands of pounds installing television screens in every delivery and sorting office in the country.

Management will use the screens to convey information and updates on the company’s performance to staff, including speeches by chief executive Adam Crozier and chairman Allan Leighton – prompting wags inside the state-controlled postal group to dub it “Allan Leighton Direct” and to compare it to George Orwell’s Big Brother.

A Royal Mail spokesman declined to comment on the cost of the new communication system, but insiders believe it will set the business back considerably. The TVs are understood to be 42-inch Fujitsu screens, which retail for around GBP2,000 each.

The Royal Mail will be able to negotiate a discount but it is still buying a considerable amount: at least one will be installed in every site, including 1,400 delivery offices, the 470 post offices the group manages directly, administration centres and other depots.

The move comes at a time when the Royal Mail is being forced to tighten its belt as it confronts a gaping pension black hole and struggles to adapt to increased competition. Earlier this month, the group confirmed that interim operating profits had come in at GBP22m, against GBP159m a year earlier. Much of the decline was blamed on costs associated with the pension deficit, which rose by GBP1bn to GBP6.6bn. But the Royal Mail has also lost a number of corporate clients, including Carphone Warehouse, BT and Centrica.

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Brussels investigates claims of unfair subsidies to Royal Mail

Posted by | Feb 23, 2007 | |

The European Commission began an in-depth investigation yesterday into Pounds 2.6 billion of government funding received by the Royal Mail over the past six years.

The inquiry was triggered by complaints from some of Royal Mail’s competitors, including TNT and the Deutsche Post-owned DHL. They claimed that the government finance amounted to illegal subsidies and gave Britain’s main supplier of postal services an unfair competitive advantage in the recently liberalised sector.

The Commission is focusing on three individual loans to Royal Mail: Pounds 500 million (2001), Pounds 1 billion (2003) and Pounds 300 million (2007). It is also examining the conditions of the Pounds 850 million that has been placed in an escrow account to reduce the contributions the company will have to make to address the deficit in its pension fund.

Both Royal Mail and the Government insisted yesterday that the financial arrangements were perfectly legal and could not be considered unfair state subsidies.

If the Commission agrees that the loans have been made on commercial terms and satisfy market investor conditions, it will close the investigation. It pointed out yesterday that the inquiry could help Royal Mail if it removed any suspicions about the status of the loans.

The main complaint was lodged last October by the Mail Competition Forum, an association of seven licensed competitors to Royal Mail. The group, which includes TNT Post, approached the Commission to protest at the measures put in place to tackle the company’s pension fund deficit.

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Spring Global Mail enters the market for international press distribution in Germany

Posted by | Feb 21, 2007 | |

Spring Global Mail is entering the market for cross border press distribution. The new product, called Press Service, enables publishers to send products at more favourable prices than the main postal companies in Germany. In addition, the product contains a large range of services for the preparation of consignments.

The German postal market has a new player in the segment of press distribution. Spring Global Mail is entering the German market for press distribution.

Press Service offers two service levels: Premium and Economy. The rates of the Premium service are clearly more affordable than those of the main postal operator in Germany. The price advantage of the Economy service depends on the weight per item. There is no restriction on the minimum amount of items.

Spring Global Mail carries print products which are either already fully prepared by the customer or material that still requires further fulfilment. In this case Spring Global Mail offers a number of additional services, such as polywrapping, inserting into envelopes, addressing and franking. Spring carries only wrapped consignments due to quality reasons. Consignments are collected free of charge by TNT Express and the mail is distributed in the destination countries by Spring Global Mail’s partners.

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Postcomm reviews Royal Mail application

Posted by | Feb 20, 2007 | |

Postcomm is seeking views on Royal mail’s application to extend its Pricing in Proportion (PiP) framework to Packetpost Returns.

Packetpost Returns is a service that allows packets to be returned from customers with the postage cost being borne by the original sender.

Currently the price per item paid by the original sender is based on the average weight of the mail returned. Royal Mail advised Postcomm that Packetpost Returns was overlooked when it made its original PiP application in August 2003, and proposes that an item returned through this service should be treated and charged as a packet under its Pricing in Proportion framework.

Royal Mail has also requested that Packetpost Returns, consistent with the greater alignment of these prices to those of normal Packetpost, should be included in the same controlled services group as Packetpost1 .

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