Royal Mail urged to split postal business

[NEWS]

One for FOzz

FT.COM

Royal Mail, which is rapidly losing contracts for handling mail since the market was opened to competition, should follow BT's example by splitting its postal operation into two independent businesses, according to a former chief executive.

In an interview with the Financial Times, Bill Cockburn said that while competitors were collecting and sorting an increasing share of business mail, they continued to rely on Royal Mail to deliver more than 98 per cent of it to homes and workplaces across the UK.

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"The delivery force has a fantastic reputation and is trusted by its customers," he said. "Royal Mail has a strategic opportunity to develop this part of the business and use the spare capacity it undoubtedly has."

Mr Cockburn, who joined the then Post Office in 1961 and rose to become its chief executive in 1992, stood down in 1995 and was managing director of BT's UK operations between 1997 and 2001. He is now deputy chairman of Business Post, whose UK Mail division handles more than 5 per cent of Britain's mail.

He said Royal Mail, which faces the threat of strikes over pay and modernisation, had been too defensive since it lost its monopoly. It needed to learn from the privatised utilities how to take advantage of a competitive market.

BT was split into a retail operation, which sold services to customers, and a wholesale business - Openreach - that runs the local networks used by all telephone companies.

"The wholesale side has burgeoned into a huge business that makes a big contribution to profit," Mr Cockburn said. "It made a lot of sense to open it to competitors."

Royal Mail's competitors already use its wholesale delivery services by handing over the sorted post for delivery over "the final mile" under so-called access agreements. This had given customers more choice and lower prices, Mr Cockburn said, while bringing back almost all the post for delivery by Royal Mail, which still collected 75 per cent of the cost of postage.

But the state-owned operator needed to become more like BT, where the two arms were wholly independent.

"If it did that, it could see real benefits," Mr Cockburn said. "It could devise new products for its customers to use the spare capacity through its unrivalled delivery network.

"Royal Mail must accept the reality of competition and drive innovation on the wholesale side rather than being defensive over a part that is not sustainable."

[pillar box]

Split the Postal Business? what next full blown privatization and yet more redundancy's ?
The regulator is too one sided Royal Mail are getting the big stick and the competition are getting the carrot.

How can it be fair that Royal Mail loose money on down stream access but the postie is still delivering the same amount of mail
(Last Mile).

The CWU are making a stand but need the support from all trade Unions.

Its time for an urgent review by this government on Regulation after all they appointed them along with Leighton & Crozier

Stop punishing the posties they have a right to earn a decent living.

[Big Daz]

Goverment policy on a review is basically when and not if.

[madsorter]

Yeah but isnt part of the problem that the regulator says wether we can take a s**t or not these days? Starting loads of innovative new products might mot be much use if we are losing £££ on other products that we simply are not allowed to ditch!!. The more ive learnt about the regulator lately the more disgusted i am........

[axeman]

and how many jobs did bt shed when they went plc. bet crazier and lateone were rubbing there hands at that proposal ...
just see them 'more money for us then adam,.... yea big al

[ROCKY]

SPLIT THE JOB=DIVIDE AND CONQUER
PLUS MORE TOP BOYS AND JOBS FOR THE BOYS

[F0zziebear]

Cockburn has a vested interest. He is also ambiguous in the article as to what this will actually mean. Royal Mail has a wholesale department as he states. This department manages the access agreeements with TNT/DHL/UK Mail etc... The access agreements are only for consolidated items of approx. 1500 or more, so it's only medium to large businesses who benefit from reduced prices at the moment. Unless a competitor comes along and offers a consolidation for multiple smaller businesses then it will remain something of a product for the few. Having said that don't be surprised in someone/company considers a consolidated option for smaller businesses!

As for innovation he is right to say that at the moment it is stifled. He is also right to point out that Royal Mail's main advatange is a national delivery workforce. I have stated this many times already.

You also need to know that Business Post who own UK Mail have no ambition to deliver their own mail. This means they are screwed if you go on a prolonged strike as non of their mail will get deliviered!!!

Yes to be honest Royal Mail is heading towards privatisation. BUt I think it should be privatisation of all bulk mail as in my opinion this is not a public service, but a commercial one. Social mail is a public service and therefore it should remian under state ownership. How it is paid for is up ofr debate. I have already pointed out that all of the competitors are likely to need the delivery force of Royal Mail and it's in their interests to maintain this workforce and the quality of the workforce otherwise the quality of their service will fall, and their customers won't be happy.

I believe their is the prospect of product innovation on large bulk mailing but can't say anymore as it's commercially sensitive. Anyone wanting to know the secret recipe can get in touch hand over a large brown envelope and then we'll talk!

So in conclusion the safest place to be is a Royal Mail postie in an area zoned as D/E (semi-rural to rural) as this will always exist. Urban posties will see their numbers cut once competitors start delivering large chunks of mail generated by big business. You will be left with the postcards and christmas cards!

However, this won't be happening for a while yet so don't take VR unless you really want to.

Don't be surprised if the union boys get an improved pay increase and a few strings removed in exchange for the axe over 45,000 posties. It happened last time and will happen again in my opinion as all union disputes follow the same path as laid down in classic economics, it's just a matter of how long before you reach a compromise which is somehwere between the two polemic positions.

F0zz on the road

[DGP1]

rest day so slightly drunk (how little that happens these days may the new government health policy) d**kheads should f**k off and let the postmen decide how to deliver the mail. Although I'm not going to infer that our esteemed(w****r) leaders will make a fourtune out of our sweat and tears. Part timers should listen to this (worst offenders)

[jmlr1971]

there could be some truth in this now that there are different wage structures for class1 and 2 drivers