Time to ditch the DSA agreement.

[wacko74]

This is how it works.

The DSA companies can charge less than we can because their systems are completely automated and what staff they do have are poorly paid compared to us.

As the DSA companies are already running on tight margins they cannot afford to absorb any increase in what we charge them without passing it on to their customers.

If they increase the cost to customers with the letters market and economy so fragile what will inevitably happen is a lot of these customers will look at other options like online billing, appointments and advertising because you're making it look less attractive to send out physical letters.
Instead of driving up our revenue you're actually driving it down.

In order for us to take back this kind of business in house and be competitive we would have to invest in the kind of fully automated cut price operation the existing DSA companies have and that would almost certainly be a separate business with a second tier workforce.

Be careful what you wish for.

I'm not sure I'd agree that the margins are so tight that the ''junk mail'' industry would simply cease to exist if mailing costs were even slightly increased.

I know someone who worked in marketing for a bank and they once told me that they needed less than 2% ''customer uptake'' from whatever they were offering in any given mailshot for it to be a profitable exercise.

I suspect that 2% figure applies across the board for all the usual junk mail suspects... Cotton Traders, Easylife, Chums, Sky, BT etc etc

You only have to look at the huge numbers of customers who pull their face and chuck their various catalogues and brochures straight in the bin without even looking at them and yet STILL these companies keep sending this stuff out to them despite getting no custom from them for years to see that these junk mail companies couldn't really care less about how accurately they target their customers presumably because junk mail is such a cheap method of advertising anyway.

[wallan]

Approximately 65% of letter volume is DSA.
Royal Mail no longer has the capacity to deal with that 65%.
The business has actually made a great deal of money by reducing that capacity and selling off the relevant real estate.

What they certainly don't want to do is re-invest in what is by all accounts a dying revenue stream.

And no, DSA was not imposed on us by the EU, "fair competition" was imposed on us by the EU. The way it was implemented is the fault of successive governments and Royal Mail boards. Very few EU countries have opened up their postal markets in such a self destructive manner. We're special.

As I understand the way DSA works the other companies just collect the letters then drop them at the nearest RM MC. So its not a case of capacity as we already do the majority of the work involved. They just undercut us on the contracts. Its like the supermarkets selling stock for less than its worth or diddling their suppliers.
The major difference, or discrepancy, is that we do the majority of the work but receive only half of the revenue. As a direct result our prices have had to rise exponentially over many years which has made us even more uncompetitive in certain categories of mail.

Companies involved in DSA Collect & Sort the Items then transport them to RM,s ,Inward Mail Center,s for final processing , i.e Walk Sorting , Despatch to Delivery Offices

[SpacePhoenix]

Companies involved in DSA Collect & Sort the Items then transport them to RM,s ,Inward Mail Center,s for final processing , i.e Walk Sorting , Despatch to Delivery Offices

Mech letter DSA gets walk sequenced (or walk sorted) all other DSA (manual letters, flats and packets) just get sorted to DO level only by the inward MC

[priority102]

With the recent announcement that we are now losing money hand over fist is it not about time we finished the DSA agreement and once again retained the full price for our delivery services. Lets be honest the DSA was supposed to help other companies set up and start their own service. That is simply never going to happen whilst they can ride on our backs. Now post Brexit as well.
RM seem to have forgotten all this, its never mentioned and they are trying to save money by cutting costs and jobs from within.

I'm pretty sure that we are required by law by the regulator to provide DSA to other companies, beyond ridiculous I agree, we must be losing millions through this and no doubt will be part of the new discussions with OFCOM (we hope).

[wallan]

If 65% of the letter traffic handled at the Inward M C is DSA , off the remaining 35% handled at the Outward M C what % is 1st Class

[deltaforce]

what we charge for del DSA stuff is more or less set by the Regulator. This is because as we are practically the only one offering delivery services nationwide . The regulator thinks we would abuse our position on prices because of that

[paulus103]

The DSA parcels at my mail centre are split 75/25 between direct sleeves / direct bags and mixed sleeves.
Last year it was it more like 20/80

We do generate a bit in missorts - these pay a steep charge per parcel.

[postslippete]

Our letters business could be profitable. There is no enthusiasm for letters from Royal Mail not because companies are now using the internet and letter volumes are down but mainly because Royal Mail don't have the full control of the letters business they had years ago when it was a monopoly. The bulk of our letters are now from downstream access as these numerous growing private companies take our profits and yet all they do is collect mail and drop it off at our door! These DSA providers don't provide anything useful to the public but are simply a drain on our future. These profits are our profits.
But there is still only one main Royal Mail network and one route where your mail is going to get delivered.

Its about time we were able to charge these blood sucking DSA companies the full market rate for the service we provide them. I would rather Royal Mail put this to OfCom rather than looking at reducing the USO service that we provide.

[Startingover]

Our letters business could be profitable. There is no enthusiasm for letters from Royal Mail not because companies are now using the internet and letter volumes are down but mainly because Royal Mail don't have the full control of the letters business they had years ago when it was a monopoly. The bulk of our letters are now from downstream access as these numerous growing private companies take our profits and yet all they do is collect mail and drop it off at our door! These DSA providers don't provide anything useful to the public but are simply a drain on our future. These profits are our profits.
But there is still only one main Royal Mail network and one route where your mail is going to get delivered.

Its about time we were able to charge these blood sucking DSA companies the full market rate for the service we provide them. I would rather Royal Mail put this to OfCom rather than looking at reducing the USO service that we provide.

Totally agree with the above. Royal Mail, if not already, should be looking at ensuring that we are not being underpaid for ensuring profits at other companies. Similar goes with the small "Chinese packets" which can number a fair few within a days delivery.