Tag: UK

The executive in charge of the wholesale division of Royal Mail has quit, only days after a ground-breaking deal was struck with its rival, Business Post.

Adam Novak, head of the business that sells Royal Mail’s services to other postal groups, left his job just before Christmas. The division is crucial to the future of Royal Mail, which has warned that it could lose up to pounds 650m a year as a result of competition in its core markets.

Mr Novak has not been replaced and it is understood that his department, which was set up only in the early part of last year, is now being folded into Royal Mail’s regulation unit.

Royal Mail is acquiring a taste for negotiation. Days after an agreement with the unions (public enemy number one), ending months of trench warfare over pay, it announced that it was in talks with Business Post (public enemy number two) over terms for allowing the private mail firm to use its 80,000 postmen and women to deliver letters.

The timing was interesting. The surprise announcement came a day before industry regulator Postcomm, which has been pressing for the market to be opened to competition in three stages by 2007, was due to impose terms for phase one.

Previous talks between the two companies on this phase – which allows competitors to collect and deliver more than 4,000 items or to consolidate post into large batches and hand them over to Royal Mail sorting offices for delivery by posties – had broken down. Last May, Postcomm published initial proposals that would have allowed Business Post access to the Royal Mail network for between 11.46p (for a second-class letter) and 406p. Royal Mail rejected this, saying the price, particularly at the bottom end, was too low and would jeopardise its obligation to provide a universal service. It threatened to take the issue to the Competition Commission.

UK Royal Mail is to face competition on letter deliveries to homes and small businesses far sooner than it currently expects.

Plans being drawn up by regulator Postcomm could see competitors such as Deutsche Post or Dutch TPG setting up rival ‘postie’ operations – including competing post boxes – as early as 2005.

The move would open domestic deliveries to competition two years earlier than planned. Under current Postcomm plans, competition comes in three phases. The first, which begins on 1 January, allows competitors to deliver 4,000 items or more, or to collect together mail from a number of customers, sort it, and hand it over to Royal Mail for delivery. Phase 2 in 2005 was to have merely reduced the lower limit on bulk items.