Brand owners are facing yet another increase in direct mail costs, the second this year alone, after Royal Mail revealed plans to hike the price of its wholesale postal service by up to a third from October.
The increase will affect Royal Mail’s bulk mail customers such as UK Mail, Whistl and Citipost, which specialise in sorting and processing mail before handing it to Royal Mail for the final mile delivery.
It comes despite a new cheaper delivery model, which reins back the Universal Service Obligation. Backed by the CWU, as well as the direct mail industry, the new scheme sees second-class and non-priority mail deliveries scaled back, moving to an every-other-day schedule from Monday to Friday with none on a Saturday.
In a letter to customers, leaked to The Guardian, Royal Mail wrote: “We understand that any price increase is difficult, particularly in the current economic environment.
“The financial challenge of maintaining the UK’s nationwide postal network supported by 130,000 colleagues remains significant, and we are facing rising costs across our operation, including fuel and labour.”
The letter explains that price increases are “necessary to ensure prices more accurately reflect the cost of providing a reliable, nationwide postal service”.
However, with a 20% increase in direct mail prices in April, the Mail Users’ Association has branded the move “unprecedented” and said this would “place considerable additional financial pressure on organisations that rely on mail to communicate with customers”.
The cost of sending a bulk mail letter weighing up to 100g using Royal Mail’s access mail business economy service – for less urgent mail, to be delivered within five days – will increase by 36.1%, while the cost of sending a large letter weighing between 101g and 250g using the standard access advertising mail service will rise by 11.4%.
A Royal Mail spokesperson said: “These changes relate to our access business customers who will continue to benefit from lower prices than equivalent consumer rates.
“Royal Mail made losses of almost £800m over the last four years and the company finances remain below the level that Ofcom considers compatible with a financially sustainable universal service.”
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