Thursday, 15 July 2010

The crazy world of Royal Mail management

The public sector in Wales, including Wrecsam Council, uses private firm TNT for all its second-class post in a deal that apparently saves £500,000 a year against the same service offered by the Royal Mail.

Yet all TNT does is collect the mail and then give it to the Royal Mail to deliver.

Now who amongst the bright sparks collectively known as Royal Mail management negotiated a deal with TNT that they couldn't offer to the public sector direct?

Answers on the back of an envelope...


Overpaid and Underworked Postman said...

Regrettably nothing to do with Royal Mail. Its all down to Postcomm and what is called Condition 21(5) access headroom.

In essence this part of the regulated market means Royal Mail cannot offer anyone else, outside of the licensed Down Stream Access, the same price for delivering their mail. For instance if Royal Mail charge TNT 13.5p per item under the DSA rules, they cannot offer that same price to NHS PCTs it has to be higher to promote competition.

This has 2 effects, it allows TNT, and any other DSA company to undercut Royal Mail. It also means that RM have to deliver the "final mile" usually at a loss.

Plaid Whitegate said...

Thanks for the explanation.

It sounds like Postcomm has an ideological remit to undermine the Royal Mail and promote the likes of TNT. How can it be in the best interests of Royal Mail (and by extension the general public who own it) to be forced to subsidise the competition?

Royal Mail management response seen to be passing the buck to posties - i.e. speeding up and cutting jobs.

Plaid Whitegate said...

This is from PostComm - see

A key feature of Postcomm’s initiatives for opening the UK postal market to competition has been enabling other mail operators ‘access’ to Royal Mail’s nationwide and six day per week delivery network. Typically, through these commercially negotiated ‘access’ agreements, new entrants collect and sort mail from their customers and then give it to Royal Mail for delivery over the ‘final mile’. Royal Mail receives from the ‘access’ operator around 13p versus the typical retail price that they charge for an ‘end to end’ bulk mail letter which is around 18p.

So Royal Mail is forced to charge 18p to the council for delivering the same service it charges 13p to TNT for. Bonkers.

Plaid Whitegate said...

In 2008, PostComm appointed Ulf Dahlsten as one of its seven commissioners. Not only has he "been actively involved in the deregulation of the Swedish postal, taxi and telecom services" but, surprise, surprise, Ulf has also been chairman of the holding company for TNT Express Worldwide.

Oh, and PostComm Chief Executive Tim Brown's son is employed by TNT Express.

This gets worse...