Postal service - Royal Mail loses ground but left withfinal mile

by Melanie May, Direct Response 19-Feb-07

Royal Mail has lost out on two major contracts to rivals TNT Post and UK Mail.

TNT Post announced last month that it had won the largest contract since the postal market deregulated, a three-year £90m contract with BT.

Under the contract, TNT Post will handle more than 170m items a year, mainly bills and statements, with Royal Mail responsible for final mile delivery. "This award of the biggest contract to date in the deregulated postal market is affirmation of our position as the main challenger to Royal Mail," said Nick Wells, chief executive of TNT Post.

In the same month, UK Mail announced that it had won a £12m contract to provide downstream access postal services for HM Government Department for Work and Pensions (DWP).

DWP is the first central government department to appoint an independent downstream access operator. It mails tens of millions of items a year from two regional distribution centres located in the North West and North East of the UK. It sends out documents such as pension statements and winter fuel-payment notifications.

It appointed UK Mail after a one-year trial that resulted in a four per cent service level improvement and substantial cost savings for DWP. The contract was due to start on 5 February.