Orange Posties on UK streets!!/Update 27/2/07

[F0zziebear]

Attached is a link giving the latest indication of their intentions

http://www.euro2day.gr/articlesfna/27659520/

[POSTMAN]

They've got 30 contracts,that's just at the moment,no doubt they will get more.
My nievity coming into play again here,can they do it?,they obviously think they can.
Can't figure it out.
So will we see small towns and crap cities with just us and the big posh places with a few of us and them then!!
Also fozz do you know when we can start competing properly?at the mo we can't can we,we can't under cut them.
When that comes in surely we should be able to win most of it back?

[F0zziebear]

They've got 30 contracts,that's just at the moment,no doubt they will get more.
My nievity coming into play again here,can they do it?,they obviously think they can.
Can't figure it out.
So will we see small towns and crap cities with just us and the big posh places with a few of us and them then!!
Also fozz do you know when we can start competing properly?at the mo we can't can we,we can't under cut them.
When that comes in surely we should be able to win most of it back?

According to TNT's strategy you need at least 1.2bn items of downstream Access per year to economically start your own delivery network without making a loss. About 60% of the Uk households are located in 8-9% of the space geographically. Therefore by offering a delivery service in certain postcodes one can make a profit. How is this so? Well basically Royal Mail are essentialy making a profit for charging the 13.5p (approx) per item to come DSA. It will cost a private company much less per item to deliver it asuming they have sufficient volume. The reason for this is that the 13.5p covers a relatively expensive and inflexible delivery cost plus central management overheads (Marketing, Sales, etc...) RM are desperate to keep the 13.5p so don't actually mind upto about 20% of total volume coming via Downstream Access


Using simple household density data and the PAF a prviate company can quite easily work-out an initial delivery route. TNT have bought a delivery company who deliver things such as telephone directories, but mainly D2D leaflets. Royal Mail essentially has two businesses. 1. is the wholesale business and the Downstream Access contracts (Royal Mail created their own department 12 motnhs ago to deal with this and I think Stephen Agar is the Head of, former regulation director. 2. The retail business is where the larger profits will come from for private business. The large volume contracts will be fought on over price and the margins are tiny. TNT and UK Mail have won these contracts on little/no/or even a negative margin. DHL has also been winning some volume and indications suggest they may enter into this price war. However, the unsorted items is where the profit can be gained and where if you dliver this yourself you can make a proper profit.

The regulator has a complex pricing tool in place that prevents Royal Mail from under-cutting. There is essentially a complex game going on between the regulator and Royal Mail. There are some very smart people in the strategy and pricing team within royal mail supported by some consultants who have effectively under-cut, prevented competition taking-off very quickly in recent years. It may not look like under-cutting on the surface but it exists. It is quite difficult to explain in a forum. This whole experience is also tied up in European law as well. This is because most of the competitors have their own un-liberalised postal systems in Europe, which will be opened up next year. They have to be careful that what will make sense for them in the UK won't expose their own postal systems in their country.

Put it this way it is expected that 3 E2E postal systems will exist within the UK in about 5 years time. The UK is the guinea-pig for the rest of Europe. However, the UK's prices are generally lower than in Europe and this has also hindered competitors from making serious attempt in the UK. TNT have taken a gamble by investing upfront in their machinery and network. They are hoping that over the next 5 years with an E2E delver network that they can turn that investment into sustained profit.

I hope that clears some things up and explains some of the current state of play. Your senior management are actually quite a clever bunch and are actually doing a good job on yur behalf. It may not seem like it on a day-to-day basis, but they are business men and know how to run successful private companies. It's a question as to whether RM is a private business. There is no right answer to this in my opinion, just opinion!

That's enough for now until next tim

[POSTMAN]

Thanks for that,will reply in more detail later.

[POSTMAN]

Hmmmm not good,so when exactly does the pricing thing change and we can start undercutting properly.
Cause no doubt,if we're all the same,we should be able to kick arse on price.
And in all fairness WE ARE BETTER than anyone else,regardless of what's going on,or how we're feeling at the mo.
And is it right to say,let them get on with it,we've got no choice at the mo anyway,and let them hang themselves.

[F0zziebear]

Unfortunately my dear friend the following:

1. RM has a pricing control with the regulator which is along the lines of RPI-1, which in real terms means a decrease in the price.
It is a highly complex situation where RM have to balance their pricing structure across a huge number of products. There is a whole department within marketing called pricing... (headed up by Lorna Clarkson) and also some consultants within the strategy department as well.
2. You will never be under-cutting the private competitors. RM has a massive pension to look after and essentially a high fixed staff (approx. 40% of revenue goes straight out on staff costs regardless of whether 1 letter or 80 billion items get delivered by RM)
The competition are currently offer at little or margin when tendering. This is why companies such as Centrica, or even the Department for Work & Pensions have gone with TNT.

Remember you should not see the gradual privatisation of RM as anything different to any other privatised industry. BT for example have split their company into wholesale and retail. Royal Mail have done exactly that, with a wholesale deapartment setup nearly 12 months ago, who actively manage competitor access through the downstream access agreement.

I am not aware at the moment of any plans to split-up Royal Mail into various parts and sell them off. This would be political suicide, but dont be naive enough not to think that talks have been held in the past with some of our bretherin in Europe.

Having said all of this what normally happens is that the incumbent (RM) will have a quality of service the private companies cannot compete on. Remember the BT and British Gas adverts which went on about people coming back, well the same thing will happen, its called history repeating itself.

The main concern for RM is if the competition create new products. At the moment this hasnt really happened and the large banks etc... are basically getting the same service at anything upto 20-30% below what they were paying RM, with RM still doing the inward sort trunking and delivery.

The only winners so far have been big business. RM has been given a kick up the backside and has improved its quality, but will still need to simplfy its products and somehow maintain the highly profitable un-sorted items which small & medium businesses send. At the moment they are highly dis-enfranchised as RM actively sought to focus on keeping as many of its top 100 customers as possible, whilst slashing their sales force by over 50% who used to sell and look after small business. A clever ploy, but a short term vision. But dont be upset for them as if they hadn't have gone you (postmen) would have been hit harder during SDD than you actually were.

Again feel free to check any of this out, and challenge your union and management. You will mainly find that your operational management won't be aware of much of this info as they mainly spend their whole working life in ops, I didn't and managed to experience ops and also work in various other parts of the business. Your union are unlikely to have a much better idea either, as it's a highly hierarchical organisation and the top dogs only pass down certain info. By the way I always admired the communication channels of the CWU, and wish RM could replicate their efficiency.

That's enough I'm off until the next rant and rave

F0zzie

[POSTMAN]

I give up,i'm getting a headache

Although this could be interesting....

Having said all of this what normally happens is that the incumbent (RM) will have a quality of service the private companies cannot compete on. Remember the BT and British Gas adverts which went on about people coming back, well the same thing will happen, its called history repeating itself.

But whatever happens,us Blue Shirts will get hit either way,when the work goes............and when it comes back

POSTMAN signing off

[POSTMAN]

The biggest private post competitor to the Royal Mail is ready to roll out a door-to-door letter delivery system in cities across the UK, bringing staff in an orange uniform shoulder to shoulder with postmen and women dressed in the familiar blue and red.

TNT of the Netherlands said it would take a final decision over the next couple of months when it had gained final data from its trials in Glasgow and Manchester but was now "hopeful" that it would proceed with its plans for the biggest ever challenge to Royal Mail's position.

TNT chief executive Peter Bakker said "I am a cautious Dutchman so I will not make a final decision until we have all of the information in from our trials, but it is reasonable to expect it is our ambition to roll out the service to other cities. I am hopeful it will happen,"

Not long now

ORANGE POSTIES

[POSTMAN]

He seems to think we're screwed an all
[quote]Royal Mail has left it too late to become an international business, the chief executive of its main rival said yesterday.

Peter Bakker, head of TNT, the Dutch postal business, said that it would be difficult for Royal Mail to catch up after years of expansion by other operators such as his own company, Fed-Ex and DHL.

He said: “It is probably too late for them now. If you went back to 1985, everyone would have said that Royal Mail was the best mail business. The Government should have allowed privatisation then.â€