Street Fight in London: TNT Post UK vs. Royal Mail
Starting in April, the private company TNT Post UK plans to test street delivery in the West End of London. Currently, TNT collects and sorts mail and then hands it over to Royal Mail, the traditional government-run postal provider in the United Kingdom, for final street delivery. Now, however, TNT Post UK wants to provide street delivery as well. TNT is seeking assistance from the UK government to provide a level playing field that will allow it to compete effectively with Royal Mail’s delivery service.
Royal Mail says that rival delivery networks hurt mail customers by undermining the efficiencies of a single delivery network, stating “If a rival delivery service cherry picks profitable, easy-to-deliver mail, it will weaken and ultimately undermine the Universal Service that only Royal Mail currently has the ability and commitment to deliver…” Britain’s postal regulator, Ofcom, plans to monitor the situation. Overall, this move represents another step toward a liberalized postal market in the UK, similar to those in other European Union countries. What are the benefits and risks of promoting this type of competition in the delivery market?
What could happen if a private company sets up a rival street delivery network that only served profitable areas, such as West End of London?
Could the traditional provider, Royal Mail, compete in the more profitable areas if it also is forced to provide delivery services to less profitable addresses in rural areas?
This blog is hosted by the OIG’s Risk Analysis Research Center.
Read MoreWhat Else Could Postal Carriers Do?
City and rural carriers deliver and pick up mail, including letters and packages. In addition, they are familiar figures who care about the people they serve, often helping in dramatic ways while making their rounds in neighborhoods 6 days a week. The U.S. Postal Service has many examples of carriers sending for help when senior citizens fail to collect their mail, alerting residents of fires, aiding accident victims, and even stopping burglaries.
But what else can carriers do? Could they provide additional services because, after all, carriers and their vehicles are present 6 days a week in every neighborhood in the U.S.? Each potential service opportunity for carriers should be evaluated by three criteria: the investment required, the risk assumed, and the potential benefits that could be achieved. So, what are some other responsibilities that carriers can take on while delivering the mail that would result in a positive return on the Postal Service’s investment?
Read MoreMail Delivery: Are There Unnecessary Steps?
Pushing the Envelope wants to ask you for your thoughts on how the U.S. Postal Service, as it faces its financial crisis, might improve operations and reduce costs while continuing to deliver mail.
Carriers are sometimes required to complete tasks and processes that leave them scratching their heads and asking, “why are we doing this?” Examples previously cited by some carriers include waiting in line for accountable items (mail that requires a signature) and having their productivity “rewarded” with more work. Another significant issue of concern to carriers is having single pieces of First Class Mail® driven out to them while on their route. There are some that believe this happens to influence First Class performance delivery scores. This action will often require a carrier to change or retrace their line of travel.
Read MoreTo Decouple or not to Decouple…
The Postal Service has “coupled” its retail and delivery operations, both managerially and physically, since delivery services were first established almost 150 years ago. Historical patterns, or the needs for delivery service efficiencies, primarily determined the location of physical facilities, which typically house both delivery and retail operations. Demands for postal retail services are changing both geographically and demographically as consumers age and population centers shift.
Read MoreMail to Rails Service
The U.S. Postal Service has aggressively moved to reduce costs by consolidating its processing network and realigning its delivery facilities. However, it has essentially eliminated rail transportation, which is the least costly way to move mail long distances.
During the recent economic downturn, railroads invested heavily in infrastructure to improve service. Private industry shippers of time-sensitive materials have responded to these improvements by shifting volume from highway to rail. UPS (the largest rail customer in the U.S.) attempts to put any package traveling over 750 miles on rail. JB Hunt, one of the Postal Service’s largest highway contractors, has shifted a substantial freight volume to rail and now earns more than one-third of its overall revenue from intermodal rail transportation.
The potential benefits to the Postal Service are clear. Rail is a less expensive and more environmentally friendly transportation mode compared to trucking. Recent estimates show that intermodal rail service can improve fuel efficiency by about 3.5 times relative to highway tractor-trailer service. In addition, rail gives the Postal Service more capacity flexibility as this mode can operate one-way, while highway transportation must be purchased in round-trips. Since Postal Service volumes tend to flow from north to south and east to west, utilizing rail would avoid the cost of paying for empty or near-empty trucks on the return trips. Rail is also far less susceptible to the weather interruptions that can wreak havoc on highways.
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