Royal Mail and its postmen and women are proud to provide the Universal Service to all 29 million addresses the length and breadth of the UK.
Recently we have seen companies like TNT Post UK establish their own mail delivery operations which bypass Royal Mail’s network for collection, sorting and delivery of mail. So far, TNT has launched a rival service in London, Liverpool and Manchester.
But this is set to expand quickly to 42 per cent of UK households, covering 8.5 per cent of the UK’s area by 2017. TNT has indicated this will include Edinburgh.
The universal service is sustained by the money we make in urban areas. This helps fund the entire national network, including delivery to areas of lower population where our costs are much higher.
Across Royal Mail, we have been working hard to manage the long-term decline in letters volumes by being more efficient, more customer-focused and growing our parcels business.
However, the already challenged universal service is now being further undermined by new entrants in the following ways:
• Where: geographic cherry picking – New entrants to the market deliver only in urban, populous areas whereas Royal Mail must deliver mail to less populous areas of the UK which are costly to serve.
• When: service cherry picking – Direct delivery competitors are not bound by the same stringent regulatory requirements as Royal Mail. For example, TNT Post UK typically provides an “every other day” service. Royal Mail must collect and deliver letters six days a week.
• What: product cherry picking – Direct delivery competitors only deliver bulk business mail, much of which is machine sequenced. This type of mail is valuable to the universal service provider and helps support the cost of processing items that have to be manually sorted.
As a consequence, we fear that a point could soon be reached where direct delivery competition leads to the universal service being unviable. Were this to happen, it could represent the loss of a vital service upon which thousands of communities up and down the UK rely.
We believe that there is sufficient evidence to support an immediate review of the postal market by Ofcom in order to fulfil its primary duty of protecting the universal service for all.
• Rob Jenson is Royal Mail operations director north