In a move that could dramatically affect costs for direct mail and mailing houses. The postal giant wants Postcomm to allow it to raise the current 13p charge to competitors to deliver its post. This comes hot on the heels of its proposal earlier this month to introduce zonal charging.
The ‘final mile’ proposal is in response to the postal regulator’s recently announced 2006-2010 price and service review, which is likely to take six months.
However, rival company TNT Post has claimed that Royal Mail charges too much already, and if it did increase the final mile charge, competition in the market would be squeezed out. Royal Mail still delivers over 99% of all letters over the final mile.
Postcomm chairman Nigel Stapleton said: “We will study in great depth the rationale behind these markedly different requests. Although the postal market has been steadily liberalised over the past four years, competition is still at an early stage.”
According to Post-Switch senior market analyst Jonathan DeCarteret, the 13p charge may not be indicative of Royal Mail’s logistical cost.
“Our view is that the 13p is covering more than logistics,” he said. “Royal Mail has a £6bn pension deficit and rival mail providers are subsidising that deficit. [Royal Mail] is trying to protect its monopoly.”
Royal Mail argued that competition in the sector had developed at a faster pace than anticipated, with its competitors handling around 25% of bulk business mail.
ISSUES FACING ROYAL MAIL
• A liberalised postal market with new players including TNT and DHL
• A pension deficit of £6bn and a 6p loss on every stamped letter it delivers
• A dip in profits as well as being bound by tight regulation, which it claims makes it difficult to compete “freely and fairly”
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