Royal Mail Agrees UK Delivery Deal

12 February 2004

British postal giant Royal Mail has agreed its first ever deal to deliver mail for a rival.

Under the groundbreaking pact, RM will receive post collected by UK Mail, a subsidiary of Business Post, and take it on the so-called 'last mile' to its final destination. It will charge between £0.13 ($0.24; €0.19) and £0.13375 per item for the service.

The agreement gives UK Mail access to RM's nationwide network of sorting offices and delivery workers. Said to be the first deal of its kind in Europe, it marks the end of the postal giant's mail monopoly.

RM reluctantly ceded its exclusive postal rights in principle three years ago (under new European competition rules), but rival firms have until now failed to agree terms for accessing its delivery network. The sector's regulator, Postcom, originally suggested a charge of £0.115 per item, but RM insisted this was too low.

"The contract we've signed today," declared RM chief executive Adam Crozier, "gives Royal Mail a commercial income stream without undermining our ability to continue providing a one-price-goes-anywhere, universal service to the UK's 27 million addresses."

Postcom said it was happy a delivery deal had finally been reached. Similar agreements are now expected with postal firms such as TPG, Hays and Deutsche Post.

UK Mail will offer a two-day mail delivery service for heavy business users from April. It hopes to take 3% of RM's business.

"Our access agreement represents a highly satisfactory basis on which Business Post intends to build a substantial, profitable business," commented Business Post ceo Paul Carvell.

Data sourced from: Times Online (UK); additional content by WARC staff