Letters Competition Hits Royal Mail After Three and a Half Centuries

18 September 2001

After enjoying three hundred and fifty years of monopoly on domestic mail, Britain's state-owned Royal Mail, yesterday confronted the hard commercial reality faced by most other businesses – competition.

Hays, a UK business services group, commenced mail deliveries on Monday within central London, Manchester and Edinburgh under a new government initiative designed to introduce competition to the nation’s postal services.

Observers of the UK postal scene were surprised to learn from PostComm, the recently appointed mail regulatory body, that it is also “minded” to issue licences to two further companies. One of the two new licensees is Business Post group offshoot UK Mail, which will collect and sort outbound mail in a number of main cities and then deliver in bulk to the Royal Mail for local delivery.

The other licence contender is a hitherto unknown company, Deva, which aims to provide a postal facility for utility companies and local authorities whenever there is a disruption of Royal Mail services.

Industry observers see the introduction of competition as a shot across the bows of a complacent RM management, the Communication Workers’ Union and a regionally unruly workforce – between them responsible for industrial disputes that last year lost the Royal Mail tens of thousands of working days.

Royal Mail parent, the goverment-owned corporation Consignia, did not welcome the chill wind of competition, accusing Postcomm of allowing the private sector to ‘cherrypick’ densely populated lucrative areas.

According to Stuart Sweetman, Cosignia’s strategy director, the Hays licence could compromise the RM’s ability to offer a universal service – letters delivered at a single price to all 27 million UK households, irrespective of remoteness. Hays aims to undercut the Royal Mail on price with guaranteed delivery before 8am.

The RM has requested permission from Postcomm to compete with its new rivals on price. This is unlikely to be granted, however, due to fears that the giant organisation will use its quasi-monopoly to smother competition.

News source: Financial Times