Year: 2005

UK Royal Mail ‘needs GBP2bn to fight new competition’

Royal Mail said today that it needed to invest GBP2bn in modernisation as it braces itself for an onslaught of new competition from January 1. No less than 14 companies have registered with regulator Postcomm to handle post in the UK, including German firm Deutsche Post and Dutch postal service TNT. Royal Mail said it would “fight for every letter”, but stressed the importance of new investment. “Royal Mail will fight hard for every single letter. Royal Mail is determined to compete successfully in the open market – but in order to do so we need a fair regulatory regime and the ability to invest GBP2bn in the modernisation of the business,” Royal Mail spokesman David Simpson said.

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DHL, UPS eye business opportunities in China’s Qingdao

DHL has announced that it will launch cargo flights between Qingdao, east China’s Shandong Province, and Hong Kong via Hangzhou, in eastern Zhejiang Province, in February next year. Several months ago, another express giant UPS from the United States launched direct cargo flights between Qingdao and Inchon, the Republic of Korea. Ken Rorok, UPS Asia-Pacific regional president, said Qingdao, as a major harbor city, provides broader market opportunities.

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Rivals snap at the heels of UK Royal Mail

Royal Mail expects to lose “billions” of mail items to its rivals over the next 12 months, following the opening up of the market to full competition on January 1. And in the change that will follow the New Year’s day revolution in the postal services market, it is business customers that are expected to be in the lead. Royal Mail lost its monopoly on mailings of 4,000 and more items in April 2003. Next week, the rest of the Pounds 6.5bn market, including lower volumes of mail sent by small businesses, is being opened up. Companies account for more than 80 per cent of the licensed market: mail costing less than Pounds 1 and weighing less than 350g. Royal Mail’s main competitors include TNT Mail, the UK arm of TPG, the Dutch postal group; DHL Global Mail, the UK arm of Deutsche Post, the German postal operator; and UK Mail, owned by Business Post, a quoted express delivery company. Those competitors say they intend to use the January 1 liberalisation as a catalyst to step up the pressure on the state-owned operator, using a combination of pricing and product innovation to try to woo more of its business customers.

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Minister to talk with UK Royal Mail‘s Leighton after tough efficiency targets agreed

Ministers are to open talks with Royal Mail over its demands for up to Pounds 2bn of investment after the postal operator agreed to tough new targets for improving efficiency. The negotiations, which will run well into the new year, are expected to focus on several options, all of which would involve the government, which is the state-owned postal operator’s sole shareholder, putting public money into the company. With Royal Mail’s financial position precarious, and trade unions fearful of another round of job cuts, its management is lobbying the Department of Trade and Industry for help. One option under discussion would be to provide the company with a loan repayable over a number of years. Another option, favoured by Royal Mail, could be some form of equity investment, not unlike a rights issue, under which the government would inject cash as equity in return for a bigger dividend in future. Alan Johnson, trade and industry secretary, will lead the talks with Allan Leighton, Royal Mail chairman.

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US Postal Service ends 2005 with remarkable results

The results are in – the US Postal Service ended 2005 with a record sixth consecutive year of growth in productivity, wiped out its debt and delivered fifty percent more mail to 32 million more homes and businesses than it did 20 years ago while doing it at 1985 staffing levels. These results are highlighted in the just released 2005 Annual Report of the U.S. Postal Service. “These remarkable results reflect the strong efforts throughout the entire organization to remain focused on the transformational strategies we identified in 2002,” said Postmaster General John E. Potter and Board of Governors Chairman James C. Miller III.

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UK watchdog in pledge over postal services

The landmark opening of the UK’s GBP6.5bn postal services market to full competition on January 1 will take five years to have its full impact, the postal regulator has said. But Nigel Stapleton, chairman of Postcomm, stressed the “pace of change” should be faster than the liberalisation of the UK telecoms and energy markets. In an interview with the Financial Times, Mr Stapleton vowed that Postcomm would use its full range of powers including prosecutions to ensure that liberalisation is not accompanied by a collapse in basic service standards. He cited the deregulation of directory enquiries in 2003, which triggered concerns about new entrants to the market giving out the wrong phone numbers, as a cautionary example of the need to protect market integrity. “As far as we’re concerned, a major issue in how successful competition will be is if we can maintain customer confidence,” Mr Stapleton said.

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Irish An Post’s next-day mail delivery rate worsens

The performance of An Post in delivering mail has deteriorated, with only 74 per cent of postal items delivered by the next working day, a new survey has found. The survey by the regulator ComReg relates to the third quarter of 2005. The figures for this period were 4 per cent down on the previous quarter. ComReg last night expressed dissatisfaction with the results and pointed out that its target for next-day delivery was 94 per cent. It also pointed to an especially poor performance in the southern region of An Post’s network, which it said appeared to be the result of operational changes. An Post strongly contested the results. Under chief executive Donal Curtin, the company has for a long time rejected the methods used by ComReg for measuring its performance.

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Federal Mediator calls for recess in UPS pilot talks

UPS today said the federal mediator in charge of negotiations between UPS and the Independent Pilots Association (IPA) has put the talks in an indefinite recess. In the NMB’s notification to the parties, the negotiations have been placed in an indefinite recess as of December 23, 2005. Although no future mediation sessions have been scheduled at this time, the mediator indicates both sides should “re-evaluate negotiating positions with respect to the remaining issues and prepare to bring the negotiations to a successful conclusion.” There can be no strike or work stoppage while the parties are in recess. UPS pilots are legally obligated under the Railway Labor Act to continue working under the existing contract during any recess.

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