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Secure Mail news articles. ........Date: 2/1/2007

One year on from full liberalisation - customers are benefiting and operators, including Royal Mail, are rising to the challenges

Source:http://www.postwatch.com, Source date:


Postcomm, the independent postal services regulator, has hailed the first year of full competition as a promising start but warned there are more challenging times ahead for postal operators.

In October, Postcomm’s market research among business customers revealed that they perceive service quality to be high across Royal Mail and its new competitors and that as a result of competition

  • 20 per cent of respondents said that their mail prices had reduced significantly
  • 38 per cent said that the choice of services available to them had improved
Although the competitive market is only a year old and Royal Mail still has more than 96 per cent of the addressed letters market, the regulator has found that competition has prompted major mailers to look more closely at their mail costs and to take advantage of the choices now available to them. Some have lowered their costs by using innovative products introduced since the market was opened. Postcomm also welcomes the fact that the benefits of competition are starting to extend to lower volume mailers as new operators begin to install sortation equipment.

In the face of full competition, Royal Mail has dramatically improved its service quality. In the July-September quarter of 2006 the company exceeded its target for 1st class mail (94.4% against a target of 93.0%) and 2nd class (99.1% against 98.5%).

Postcomm Chairman Nigel Stapleton said:

“Full competition is off to an encouraging start in 2006 with 18 new operators now in the market. Many large mailers, both in the private and public sector, have switched to new operators who they have found to be reliable and sensitive to their specific needs. Everybody has benefited because, in response to competition, Royal Mail has delivered record service levels.

“Mail is a challenging market because it is being impacted by e-substitution and is price sensitive, particularly with direct mailers, who account for nearly a fifth of the market as they have other ways by which to promote their products and services. However, we believe there is more scope for all postal operators to introduce innovative products which will be valued by customers.

“Although Royal Mail has improved its quality of service it is imperative that Royal Mail continues to modernise and reshape its business in order to succeed in a competitive market and to maintain a strong universal service that customers value. Although prices have had to increase, this is to help Royal Mail address its substantial pensions deficit and carry out its investment programme.”

Competition in delivery - the ‘final mile’ - has thus far been slow to develop, due mainly to the difficulty of competing with Royal Mail’s economies of scale and its VAT advantage. However customers have been well served by the substantial growth of downstream access, which now accounts for over 10% of addressed letter volumes. Some operators may use access to build critical mass to allow them to develop their own end-to-end networks and new innovative services for customers.