TNT Mail to take on Royal Mail with delivery service

by Kim Benjamin, Marketing Direct 26-Oct-05

Postal operator TNT Mail says it has ambitious plans to launch an end-to-end delivery service that will challenge Royal Mail's dominance of the market, despite the fact TNT's current service is about to be axed.

TNT Mail has been using Express Dairies' residential delivery service
since last year to distribute small parcels, magazines and catalogues.
However, mounting losses have forced Express Dairies to scrap the

service as of next month.

"It's clear we will never be in a position to match Royal Mail's
delivery scale, but we will be its prime challenger," said David Higham,
development director for TNT Mail. "Where there's a business case to put
forward, we will be there. Our deal with Express Dairies was mainly
concerned with heavier items and this is only a small part of the
market."

Higham said TNT Mail will be looking at offering a service for
heavier-weighted items and letters and could seek to develop this
through a partnership or by acquisition. It has more than 30 clients at
present, including Lloyds TSB and npower.

But industry experts have expressed doubts over whether TNT Mail has the
capabilities to deliver a robust service.

David Laybourne, technical director at DPS Direct Mail, said: "Express
Dairies has struggled to make money, despite delivering around six
million items in the past year. The infrastructure costs associated with
establishing an end-to-end service are enormous."

Experts say TNT's plans will be further hampered by Deutsche Post's
recent takeover of UK logistics company Exel.

"Volume is everything for Royal Mail competitors such as TNT and UK
Mail," Laybourne said. "Deutsche Post's takeover, although mainly
concerned with the logistics rather than the mail market, means the
icing is now being spread that little bit thinner."
- News Analysis, page 20.