How a liberalised mail market works

What does a liberalised mail marketlook like? What might an Asian countryexpect if it allowed competitors to itsnational post office? For an answer, one might look at theUK, which is one of the most liberalisedmarkets in the European Unionat present. True, its national postaloperator, Royal Mail, is still government-owned, when other Europeancountries – most notably […]


What does a liberalised mail marketlook like? What might an Asian countryexpect if it allowed competitors to itsnational post office?

For an answer, one might look at theUK, which is one of the most liberalisedmarkets in the European Unionat present. True, its national postaloperator, Royal Mail, is still government-owned, when other Europeancountries – most notably Germanyand the Netherlands – have privatisedtheirs, but Royal Mail is under pressureon its home patch as never before.

Witness the announcement in earlyJanuary that the biggest UK governmentministry – the Department ofWork and Pensions – was to switchsome of its mail from Royal Mail toUK Mail, a private operator, in a dealworth $23m. The department cited apotential $9.5m in savings in its annual$136m bill for postal services as thereason for the switch.

With other government departmentsunder similar pressures to cutcosts, analysts expect Royal Mail tosuffer further such losses in businessin future. The government’s own NationalAudit Office estimated recentlythat the government could realisesome $60m of savings by more efficientuse of postal services, for example by pushing operators to give them volumediscounts. Currently less than 20 percentof mail sent by UK governmentdepartments and agencies attracts avolume discount.

Meanwhile January saw TNT Postwin several large commercial contractsin the UK. On 15 January, for example,it announced that telecoms operatorBT had chosen to use its Premierservice, which provides a two day timedefinite service for 170 million itemsof pre-sorted mail each year – mainlybills and statements or what is knownas transactional mail – in a deal worthsome $175m over three years.