Royal Mail says fall in post volumes accelerating

Post by **TrueBlueTerrier** » 25 Oct 2008, 12:33

http://www.ft.com/cms/s/0/18b85648-a106 ... ck_check=1

Royal Mail says fall in post volumes accelerating
By John Willman, Business Editor
Published: October 23 2008 15:27 | Last updated: October 23 2008 15:27
Royal Mail is paying the price of the economic slowdown with businesses and individuals cutting their postal bills to rein in costs.

Mail volumes were down 4 per cent in the past six months, as increased competition from electronic media and private sector postal operators combined with the mounting economic gloom to reduce the number of letters and parcels.

Royal Mail’s daily postbag is now about 79m items – 5m fewer than two years ago when volumes peaked.

The state-owned group said mail revenues were linked closely to gross domestic product, with usage particularly vulnerable to a downturn in the advertising market. Users were also switching increasingly to e-mail, instant messaging and the internet, motivated partly by cost and a desire to cut carbon emissions associated with mail.

Competitors were now handling one in three mail items, collecting them from bulk mailers and sorting them before handing them on to Royal Mail for delivery to 28m homes and businesses across the UK.

In spite of the adverse market, Royal Mail more than doubled its profits in the six months to the end of September – from £86m in the same period last year to £177m – helped by cost-cutting and new products.

The group gave warning, however, that the outlook appeared bleak, with the one-price-goes-everywhere universal service remaining loss-making.

Its pension deficit – £3.4bn at the last valuation in March 2006 – had risen “substantially”. It was not able to raise money for further modernisation from the financial markets, and government funding was subject to European Union rules on state aid.

“The increase in our profitability underlines the huge effort that has been made to drive up quality of service, cut our costs and improve our current financial performance,” said Adam Crozier, the chief executive.

“However, we are also facing huge pressures, with the universal postal service still loss-making, competition intensifying still further both from electronic communications and rival operators – and the increasingly heavy costs of servicing the historic pension deficit.”

A government review into the future of the universal service is due to report to Lord Mandelson, the business secretary, in the next few weeks. The review, by Richard Hooper, a former communications regulator, is expected to say that the current arrangements are untenable and recommend ways in which Royal Mail could draw on private capital.

The German and Dutch postal operators have been privatised in advance of the introduction of full competition in the mail market, and France’s La Poste plans a partial privatisation. The Danish, Swedish and Belgian post offices have teamed up with CVC, a private equity firm, to raise capital ahead of flotation.

Royal Mail is hoping that the Hooper review will recommend a change in the regulatory regime, merging Postcomm, the postal services regulator, into Ofcom, the communications watchdog, to reflect the changing nature of the mail market.

Allan Leighton, the Royal Mail chairman who is standing down at the end of March, has described the current regulatory regime as “unsatisfactory”.

He believes that Postcomm’s remit to encourage rival mail operators to enter the market has led to Royal Mail being shackled in competing with electronic competitors such as e-mail, text messages and the internet.

Big Daz · Post by **Big Daz** » 25 Oct 2008, 15:43

TrueBlueTerrier wrote:http://www.ft.com/cms/s/0/18b85648-a106 ... ck_check=1

Royal Mail says fall in post volumes accelerating
By John Willman, Business Editor
Published: October 23 2008 15:27 | Last updated: October 23 2008 15:27
Royal Mail is paying the price of the economic slowdown with businesses and individuals cutting their postal bills to rein in costs.

The German and Dutch postal operators have been privatised in advance of the introduction of full competition in the mail market, and France’s La Poste plans a partial privatisation.

The German and Dutch postal operators have only been part privatised unless the Dutch Government have flogged off their minority share and the German government have flogged off their majority share.

Phantom · Post by **Phantom** » 25 Oct 2008, 16:36

Everything possible is being done to convince Government and the public that the only way solve this postal problem is privatise it. Utter bollocks!!!

The king of spin is back (Mandelson) with his wooden spoon and he's already started.

Electronic advertising via email is crap - i've been using the internet since 1996 and nobody reads junk emails, they don't even get opened, just select all and delete.
0.01% response rate to email ads
2% from items delivered through your letterbox

Night Tonic · Post by **Night Tonic** » 26 Oct 2008, 17:35

Theres no mention of email advertising which in the UK is controlled by stricter laws now. This is about companies using email for correspondance and online ads to reach consumers. Check out 'Phorm' for starters. Its not crap, its happening. Look at how many companies offer cost savings for online billing now.

axeman · Post by **axeman** » 26 Oct 2008, 17:42

it's back to royal fails scaremongering tactics again more bullshi* being spread by the dim dum's and the unbiased currier (best place for it is under the containers of the take away meal) ... and goes without saying they belive everything said at the conference calls

DGP1 · Post by **DGP1** » 26 Oct 2008, 17:48

I don't believe anything that comes from RM anymore, mail up, mail down, profits up, profits down, underworked, overpaid, I just don't believe them. My DO is struggling now and the Pegasus review hasn't been implemented TBH I can't see myself there by the end of the year let alone in 1 years time.

Phantom · Post by **Phantom** » 26 Oct 2008, 18:36

Night Tonic wrote:Theres no mention of email advertising which in the UK is controlled by stricter laws now. This is about companies using email for correspondance and online ads to reach consumers. Check out 'Phorm' for starters. Its not crap, its happening. Look at how many companies offer cost savings for online billing now.

I know this happens and you also get email ads too, you dim wit, have you never had emails asking you to buy Viagra or Weight loss pill, come on don't say that these are down too. No law governs the internet in this country and if it does it doesn't work, now why does that surprise me. If you want proof I'll email you a few hundred email ads from one of my old email addresses which i don't use anymore cos its full ads.

DGP1 · Post by **DGP1** » 26 Oct 2008, 18:42

My spam folder usually gets around 100 e-mails per day and they don't even get looked at just put straight to the bin.

k979aaa · Post by **k979aaa** » 26 Oct 2008, 19:44

I will say this royalmail do not count in their volumes the D.S.A it would be crazy to do so as we do not get a margin on any item sent by the competition!. It is like saying we do something for nothing to the market what would happen they would all go to the competition and we would have no margin (profit)!. And anybody who says the access price is fair is an asshole just look at the pension deficit and not too mention the closeing of the postoffice's!.

Big Daz · Post by **Big Daz** » 26 Oct 2008, 20:59

DSA price is definetly unfair considering its treated as 1st class.

Night Tonic · Post by **Night Tonic** » 26 Oct 2008, 21:35

Phantom wrote:
Night Tonic wrote:Theres no mention of email advertising which in the UK is controlled by stricter laws now. This is about companies using email for correspondance and online ads to reach consumers. Check out 'Phorm' for starters. Its not crap, its happening. Look at how many companies offer cost savings for online billing now.
I know this happens and you also get email ads too, you dim wit, have you never had emails asking you to buy Viagra or Weight loss pill, come on don't say that these are down too. No law governs the internet in this country and if it does it doesn't work, now why does that surprise me. If you want proof I'll email you a few hundred email ads from one of my old email addresses which i don't use anymore cos its full ads.

'Dim wit' as an answer doesn't cut it nor strenghthen your argument. Since when have you had a Viagra ad via RM??? You'll find that email for viagra comes from outside the UK and spam DOES have new laws in the UK that require the sender to provide an 'opt-out' facility. If you don't comply you can be fined now. Anything outside the UK isn't even part of the equation or the subject. What is it with some people? world still flat or something? Companies have been throwing a great deal of money into online advertising, even Royal Mail or had that escaped you too? ho ho.

axeman · Post by **axeman** » 26 Oct 2008, 22:52

Oh nighty were now part of a global financial economy didn't you realise that ? royal fail can't escape this in fact they keep reminding us of the dutch p.o regulary. Time you woke up to royal fail antics and stop spouting the rhetoric of old street as if it's gospel

F0zziebear · Post by **F0zziebear** » 27 Oct 2008, 10:21

DSA volumes are counted by RM as they are delivered by RM. RM charge approx. 13.5p for inward sortation and delivery. That is a competitive price and whilst the margins have decreased it is better than nothing (not sure if they make a loss on it, but would be surprised).
Secondly, I have both happy and un-happy to say that I predicted this happening many months ago. Most of RM's traffic is now some form of advertising/fulfillment. Both of these will suffer during a recession, which means RM's volumes going down.
The good news is that TNT and DHL will be hit even harder as most of their volume is adveritising related.

Post by **trythat** » 27 Oct 2008, 12:38

F0zziebear wrote: Most of RM's traffic is now some form of advertising/fulfillment. Both of these will suffer during a recession, which means RM's volumes going down.
The good news is that TNT and DHL will be hit even harder as most of their volume is adveritising related.

I don't actually agree with this, I'm delivering more catalogs than usual, and some of the databases are way out of date, so I personally think advertising goes up, to try and makeup for the loss in high street sales.

F0zziebear · Post by **F0zziebear** » 27 Oct 2008, 14:40

Trythat. Can't argue with what you see/feel in your postal bag. Obviously this time of the year is the key time to advertise in the lead upto Xmas and some/most retail companies make their big revenue gains during this period. Also note that advertising campaigns, and especially print based one's have a several month lead time. I won't dismiss your feedback completely, but would be surprised if there is the same autumn pressure as in previous years, and expect January/February next year to be rather quiet. Plenty of early finishing, chance to implement Pegasus, and clean out your frames.

Sorry to found like a pessimist, but bear in mind your jobs are safer than most. You might also see an improvement in agency staff as more people will be unemploed and desperate for work (not saying being a postie etc. is the bottom of the pile).