Competition in final-mile postal delivery has enabled incumbent postal operators in Europe tobecome more flexible, innovative and efficient, according to the CEO of TNT Post UK, although his
claim was disputed by the CWU union.Nick Wells told this week’s The Future of UK Postal Services conference that research by thepostal consultancy WIK Consult showed that four European countries that have already seen muchhigher levels of postal delivery competition than in the UK – Germany, Sweden, the Netherlands andSpain – have experienced a positive impact on the incumbent postal service provider’s ability todeliver its universal service obligations.
“Competitive positions have been taken in these four markets, ranging from 10 per cent to 17per cent, and the universal service has not only been maintained, but with improved quality,”claimed Wells. “The incumbents have benefited with a more flexible cost structure, increasing theirsuccess, and allowing them to respond to the dynamic changing positions in the market.”
Wells claimed the UK postal market, where 99 per cent of final-mile postal deliveries aredone by Royal Mail, would also benefit from real final-mile competition, despite the fact thatpostal markets are now in structural decline, claiming that choice was what consumers wanted, andwas what drove innovation and efficiency. Wells said his vision was for two or three differentcompanies delivering final-mile postal services in the UK, with one of these being TNT Post UK.
“We all want a thriving and successful Royal Mail, because the postal market won’t existwithout it,” insisted Wells. “But customers and consumers have truly benefited in these fourmarkets through choice, and the only way to deliver true choice is through competition in the finalmile. Now, Dave Ward [of the CWU union] is complaining about a lack of innovation, and maybe he ispartially right. This will deliver true innovation.”
However, Dave Ward, deputy general secretary of the CWU, questioned the benefits ofend-to-end competition, claiming that PostNL (the former TNT Post operation in the Netherlandsuntil its separation this year from TNT), for example, had experienced serious problems due to opencompetition in mail.
Wells responded: “Of course they have been affected, because 14 per cent of their market hasbeen taken from them. But it has stimulated change. They still have the reputation of being theworld’s most-efficient postal operator. They may have had some difficulties, but they have takenthose on board and adapted their approach and become more flexible.”
A spokesman for PostNL said: “Yes, that is part of the story. An important thing thathappened in the Netherlands was that competitors in the Netherlands began rewarding their postdelivery staff on a piece-by-piece basis, and it was set up in such a way that you could talk aboutthem dumping wages to just below minimum wages. The big threat for PostNL, as we are called today,was that this created a price spiral.”
He said the market had changed substantially since that time, including various factors thatappeared to have halted the price spiral, including the launch of new mail products and acompetitor changing its approach to incentivising its staff. “But in the end, it stimulated us tomove forwards and be prepared for the future,” he added.
However, Ward told CEP-Research he believed that these changes had undermined PostNL and itsability to operate its USO, leading the company to lobby for a three-day USO. He said it had alsocaused the company to follow its competitors into ‘casualising’ its postal delivery workforce, achange that it was now looking to reverse.
“They now admit that moving towards a more casual delivery model was a mistake, and aretrying to move back towards a workforce that is more motivated,” Ward said.
