TNT Post is planning to roll out its own delivery service for bulk and direct mail, going head to head with Royal Mail’s ‘final mile’ service for the first time, according to the company’s boss Nick Wells.
Wells said the scheme, which has already been on trial in Liverpool, will be expanded to other urban centres, although it does need to be rubber-stamped by regulator Ofcom.
“Watch this space. We will be extending our plans this year. It will not be long before you see orange postmen on the streets,” said chief executive Wells.
TNT clients include Revenue & Customs, BT, Centrica and Sky, but final mile deliveries are currently handled by Royal Mail. The state-owned postal operator charges 13p per item and is calling for an increase in this figure as it claims it loses money on each item.
But Ofcom’s plans to let Royal Mail set its own prices would cover costs for access to its network for competitors such as TNT Post and UK Mail, subject to transparency about costs and monitoring by the regulator. A move the DMA claims could also lead to a mass exodus from direct mail.
Wells said: “They [Ofcom] need to be very careful to get the balance right between providing an environment that’s conducive to having an efficient Royal Mail and encouraging competition. I think they have swung the pendulum far too far in favour of Royal Mail.”
Another bone of contention for TNT and the other private operators is that Royal Mail is still exempt from paying VAT, meaning other operators are automatically 20% more expensive.
TNT has been forced to challenge this in the European Court of Justice as the Government is unwilling to budge because it would reduce its attractiveness to potential buyers. Wells said that it would be “outrageous” if the VAT exemption continued after privatisation.
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