Mail competition is 'no benefit'

Post by **TrueBlueTerrier** » 06 May 2008, 11:20

http://news.bbc.co.uk/1/hi/business/7385044.stm

The liberalisation of the UK postal service has produced "no significant benefits" for either households or small businesses, a report has said.

That is the initial finding of an independent review of the UK postal sector commissioned by the government.

It warned there was now a threat to the Royal Mail's financial stability.

The Royal Mail's 350-year monopoly ended at the start of 2006, when other licensed operators were given the right to collect and deliver mail.

'Untenable'

The independent panel warned that the "substantial threat" to the Royal Mail's financial security threatened the universal service - the collection and delivery to all UK addresses.

As a result, the independent panel - which will produce its full report in the summer - said the continuing "status quo is not tenable".

"The policies needed to establish a sustainable future will be the focus of our report later this year," they said.

While the initial report said homes and small firms had not gained from the increased competition, it said large companies had "seen clear benefits from liberalisation - choice, lower prices and more assurance about the quality of the mail service".

It says these large firms have benefited from the big growth in competition in the bulk mail sector - postal firms that collect, sort and transport bulk mail before handing it over to the Royal Mail for the final delivery.

Yet at the same time, the report found that the Royal Mail still had "virtually no competition" in the delivery of addressed letters over the "final mile" to letterboxes.

"Maintaining the universal service is at the heart of this review - ensuring collection from pillar boxes and post offices and delivery to all addresses," said the report.

'Stable future'

Looking towards the final report, the panel said it needed "to establish how best to create the incentives for Royal Mail to modernise its operation, providing a stable financial future".

Last year Royal Mail announced a programme of changes to pay and working practices which it said were essential to modernise the service and enable it to compete more effectively.

However this led to a strike by Royal Mail staff and a bitter dispute which, although now resolved, is estimated to have cost Royal Mail more than Â£200m.

The independent review panel was appointed by the Department for Business, Enterprise and Regulatory Reform.

combocrasher · Post by **combocrasher** » 06 May 2008, 11:45

Yet at the same time, the report found that the Royal Mail still had "virtually no competition" in the delivery of addressed letters over the "final mile" to letterboxes.

What bit of this do they not understand? it is clear that the private firms see the final mile as unprofitable and burdensome that is why it has been left to us

Broxi51 · Post by **Broxi51** » 06 May 2008, 13:38

While the initial report said homes and small firms had not gained from the increased competition, it said large companies had "seen clear benefits from liberalisation - choice, lower prices and more assurance about the quality of the mail service".

Before we started heading into this liberalisation mess, prices were 21p first class & 19p second class.
How is 38p today offering lower prices? Even our so called competitors cannot be charging less than 21p for a first class service.

Night Tonic · Post by **Night Tonic** » 06 May 2008, 14:01

Downstream Access

Broxi51 · Post by **Broxi51** » 06 May 2008, 14:26

Night Tonic wrote:Downstream Access

Even with DSA they would only be making 7.5p per letter to collect, sort & transport if they kept it cheaper than 21p.
I dont think so!

Night Tonic · Post by **Night Tonic** » 06 May 2008, 14:57

Small profit or not, when you're poaching big contracts, and they are, those pennies soon add up.

sevenandseven · Post by **sevenandseven** » 06 May 2008, 15:18

In the last financial report doing other companies deliveries cost Royal Mail Â£53 million in losses through DSA. How is that beneficial to a big company such as Royal Mail?

steviemac · Post by **steviemac** » 06 May 2008, 16:15

Are we seeing a levelling out of the competition market share which after 3 years is not unexpected and will regulators now turn attention to competitors long term plans regarding final mile and universal obligation? This will raise the vat exemption issue which i believe will force the government to realise the price of a stamp will rocket and will need a big commitment from competitors to declare if they will enter direct final mile mail deliveries. I feel this article has positive side to it as cannot see any government endagering the economy by increasing prices ( and alienating the public), maybe even realise what a good earner royal mail was before tinkering took place and i bet they would like a nice few 100 million to play with like the old days. would love to see how the petrol prices are affecting our competitors margins and feel we are able to absorb better the extra costs due to economy of scale. A good 12mths of a mini recession would surely force a few of our smaller carriers to the wall of which we would pick up a share of their lost contracts?

Phantom · Post by **Phantom** » 06 May 2008, 17:04

steviemac wrote:Are we seeing a levelling out of the competition market share which after 3 years is not unexpected and will regulators now turn attention to competitors long term plans regarding final mile and universal obligation? This will raise the vat exemption issue which i believe will force the government to realise the price of a stamp will rocket and will need a big commitment from competitors to declare if they will enter direct final mile mail deliveries. I feel this article has positive side to it as cannot see any government endagering the economy by increasing prices ( and alienating the public), maybe even realise what a good earner royal mail was before tinkering took place and i bet they would like a nice few 100 million to play with like the old days. would love to see how the petrol prices are affecting our competitors margins and feel we are able to absorb better the extra costs due to economy of scale. A good 12mths of a mini recession would surely force a few of our smaller carriers to the wall of which we would pick up a share of their lost contracts?

Totally agree with you. I can see many contracts returning to RM its only a matter of time and increasing stamp prices coupled with a worsening service is not a vote winner! Private companies won't enter the delivery market as its too costly and they are quite happy making a fair few quid with dsa, who needs the hassle of delivery offices??? tnt and the like don't.

RM need to start coming up with new ideas to generate revenue and not rely on the cost cutting to fill the gap dsa is having, so come on you thick f***s in the boardroom earn your cash.

Big Daz · Post by **Big Daz** » 06 May 2008, 17:51

The full report from the review team is on CWU website attached to a LTB

Only read a little bit so far but looks good for us and bad for Postcon!

Post by **TrueBlueTerrier** » 06 May 2008, 18:29

Big Daz wrote:The full report from the review team is on CWU website attached to a LTB

Only read a little bit so far but looks good for us and bad for Postcon!

Yes it has recognised that protecting the USO and promoting competition are actually 2 aims that clash with each other. But their projected losses in the next 4 years because of the decline in the market is quite scary.

Lets hope they get the next stage right and come out with some worthwhile and sustainable recommendations.

somerset · Post by **somerset** » 06 May 2008, 18:30

I see Tesco clubcards have come back to RM from DHL in are area.

Also when sorting see a few others coming back to the fold! So much for the competition ! It's just a vicious circle. Big companies now realise that the likes of TNT etc cannot collect and sort it to us quick enough. Public moaning about getting bank statements etc late .

BB brother · Post by **BB brother** » 06 May 2008, 19:10

Lol ! Government appointed enquiry gives government green light !

Politics eh ! At least this one is gonna help us. The partys over DHL , TNT et al .

Gotta love Browns anti european agenda, about time a leader put us first. Are you watching tony Blair ? (wannabe president of Europe and one time Royal mail sacrificer )

Darren Bent · Post by **Darren Bent** » 06 May 2008, 19:10

Noticed Dell magazine is also Royal Mail this week.

apple · Post by **apple** » 06 May 2008, 19:40

From the BBC news site
'Stable future'
The core problem for the Royal Mail is that while it has lost business in the lucrative bulk mail collection and sorting market, it still has to uphold the universal mail delivery service, which struggles to make a profit.
Looking towards the final report, the panel said it needed "to establish how best to create the incentives for Royal Mail to modernise its operation, providing a stable financial future".
Mail industry analyst David Stubbs said that one possible solution would be other firms taking over delivery work in the more remote parts of the UK, and being paid a subsidy to do so.

so how would subsidizing other people to deliver it make it any better?

ROYALMAILCHAT

Mail competition is 'no benefit'

Mail competition is 'no benefit'

Re: Mail competition is 'no benefit'

Browns got one policy i gree with,