Whistl takes aim at Royal Mail's 'predatory pricing'

[TrueBlueTerrier]

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Interfering with the mail is a criminal offence that could bring a heavy fine or imprisonment. Trying to compete with Royal Mail can also be costly, as Whistl discovered this week.

The only rival to offer door-to door letter delivery suspended its services and 2,000 staff after racking up heavy losses.


Nick Wells, Whistl chief executive, blames Royal Mail’s “anti-competitive and predatory pricing” practices for its difficulties.

“We were the only guys in town looking to challenge Royal Mail in end to end deliveries,” says Mr Wells. “Customers were telling us they wanted competition in the market and they wanted choice. But Royal Mail threatened to charge us higher prices than the others because we couldn’t be on a national contract and that put uncertainty in the market.”

Whistl, a unit of the Dutch mail group PostNL — formerly known as TNT Post UK — only delivers to 1.2m addresses in west London, Manchester and Liverpool. It collects and handles 26 per cent of UK letters but has to pay Royal Mail to deliver most of them.

Whistl had hoped to deliver to about a quarter of the UK by the end of 2016 but that requires building its own distribution network. With uncertainty over costs dragging on, a potential joint venture partner, LDC, the private equity division of Lloyds Bank, withdrew its planned investment.

Whistl’s business always looked a gamble: letter volumes are declining by about 4 per cent a year.

Thomas Cullen, an analyst at Transport Intelligence, a consultancy, says: “The truth is that the mail market across the developed world is in quite sharp decline and major investment in new capability is not attractive.”

Mr Wells says the delivery service has been “treading water” since December 2013 when Royal Mail threatened to raise its prices. It halted its expansion until regulator Ofcom ruled on the issue, expected some time this year. Royal Mail has said the complaint is unfounded.

With Whistl’s orange and black uniformed posties taking their bikes off the streets, Royal Mail has no rivals delivering domestic letters more than 18 months after its £3.3bn privatisation aimed at introducing competition to the market.

The 500-year old institution, which delivers full-year results next week, still faces a stiff challenge — including from Whistl — in the cut-throat parcels market, the growth area for the postal industry but one that has also claimed victims. CityLink, the private-equity owned courier company, closed on Christmas day, costing thousands of workers their jobs and leaving taxpayers to pick up the redundancy bill.

Whistl made a pre-tax loss of £8.1m in the year to December 2013, the latest accounts available, on £575m revenue. That included a £2.1m investment in the “final mile” letter delivery service. A year earlier it made £5.7m profit and £1.9m investment.

Mr Wells says it had always expected to make “start-up losses” and had factored the decline in letter volumes into plans from the outset, focusing on the growth in direct marketing instead.

A decision on the future of the delivery service is expected within weeks. The 2,000 staff — about half of whom are on zero hours contracts — will receive one week’s pay or their normal contractual commitment and notice period.

Mr Wells insists he has not yet “thrown in the towel” on the business and could find an alternative investor or use of the network. But Royal Mail has been busy absorbing the Whistl deliveries back into its network and staff.

Royal Mail has complained that Whistl focused on densely populated inner city areas, where costs are lower. It is obliged to cover the entire country six days a week for the same price. Last year Royal Mail’s chief executive, Moya Greene, told MPs that Whistl was “cherry-picking” urban postal markets and undermining Royal Mail’s ability to provide a financially sustainable service to rural areas.

These claims were rejected in December in preliminary findings by Ofcom, which said competition should provide an incentive for the firm to become more efficient.

If the regulator finds the group guilty of anti-competitive practices it could be fined up to 10 per cent of turnover.

Royal Mail’s shares ended this week higher as investors saw the threat of competition recede.

But with the Ofcom review pending and rivals including Whistl encroaching on the rest of its business, their relief might be shortlived.

[El-Bandito]

Boo Hoo. Mr Wells. Your cherry picking exercise failed and it's Royal Mail's fault? Get real. Wake up and stop blaming Royal Mail for YOUR incompetence. Failing that why don't you just go back to the Dickensian hole you crawled out of. "2000 workers about half the workforce are on zero hour contracts"will get 1 weeks pay/ redundancy? 1 week redundancy of 0 hours = zero pay.

[arnold cheshire]

Whistl, a unit of the Dutch mail group PostNL — formerly known as TNT Post UK — only delivers to 1.2m addresses in west London, Manchester and Liverpool. It collects and handles 26 per cent of UK letters but has to pay Royal Mail to deliver most of them.
is this 600 houses per whistl postie and they can not compete it must have been easy for the whistl postie

[Surreypostie]

If they don't want to pay the price then deliver it themselves, simple.

Oh they tried that.

Royal Mail complains about the threat to the USO from their cherry picking, we all know, the stuff they want pays for the rest.

Swivel on it Whistl.

[arnold cheshire]

If they don't want to pay the price then deliver it themselves, simple.

Oh they tried that.

Royal Mail complains about the threat to the USO from their cherry picking, we all know, the stuff they want pays for the rest.

Swivel on it Whistl.

well said surrey

[rubberbond]

If they don't want to pay the price then deliver it themselves, simple.

Oh they tried that.

Royal Mail complains about the threat to the USO from their cherry picking, we all know, the stuff they want pays for the rest.

Swivel on it Whistl.

well said surrey

+ 1

[raikky]

funny how whistl are complaining about the same thing as what there complaining about in the home country. hypocrits

[Lounge Lizard]

Whistl, a unit of the Dutch mail group PostNL — formerly known as TNT Post UK — only delivers to 1.2m addresses in west London, Manchester and Liverpool. It collects and handles 26 per cent of UK letters but has to pay Royal Mail to deliver most of them.
is this 600 houses per whistl postie and they can not compete it must have been easy for the whistl postie

That's 300 houses per day each if they deliver on alternate days but someone on this forum observed one of them only delivering to 15 houses in a street of 50 so that's down to about 90 houses each per day which, without packets and parcels, looks like a very low productivity rate.

[centenaryman]

Whistl, a unit of the Dutch mail group PostNL — formerly known as TNT Post UK — only delivers to 1.2m addresses in west London, Manchester and Liverpool. It collects and handles 26 per cent of UK letters but has to pay Royal Mail to deliver most of them.
is this 600 houses per whistl postie and they can not compete it must have been easy for the whistl postie

That's 300 houses per day each if they deliver on alternate days but someone on this forum observed one of them only delivering to 15 houses in a street of 50 so that's down to about 90 houses each per day which, without packets and parcels, looks like a very low productivity rate.

twas I...that observed this,,,,and yeah there walks were similar in size to 1 of ours,,so about 500 to 600 delivery points,,and they only delivered every other day.

but think logically if they have a 26% of uk letters then it will stand to reason they'll only go to 1/4 of the houses.

i chatted to a whistl postie he was doing 4 walks that day,,,and had all his mail on his bike in pouches......his TOTAL pouches were smaller than the 1 bag i had on that loop.....how on earth could they ever hope to make it pay