Royal Mail privatisation

[Butts]

As you have brought it up, I was surprised to receive a letter posted by someone in TNT Post uniform at around 14.30 this afternoon, after the Royal Mail delivery staff had already delivered several hours earlier. I was under the impression that following the opening up of the postal market to private companies, this only covered certain aspects, and that all delivery to residential addresses was still to be handled by Royal Mail. Certainly when I was at a different address, letters with ordinary stamps, Royal Mail franking and TNT stickers were both delivered by the same, Royal Mail, employee. Has this changed now or is it only the case in larger cities that both TNT and Royal Mail employ staff for residential deliveries?

Edit: http://postandparcel.info/56437/new...pands-end-to-end-delivery-trial-to-sw-london/. Ah seems it is new then, this article dated June 2013 states "TNT’s postmen and women, sporting orange-and-black uniforms, are now delivering mail in the boroughs of Hammersmith & Fulham, Wandsworth, Merton and Lambeth."

Apparently they are going to have a limited number of their own Post Boxes in a few trial areas (according to my son's induction)

With regard to my earlier comments about being weekly paid as a Postman - he does not even have to work a week in hand he gets paid this Friday having started on Monday.

Also as soon as the work is finished he gets to go home and is paid for the hours that were allocated regardless of how early the task is completed. If he works over he is paid overtime - win win !!!

 

[Greenback]

I thought that Royal Mail had to do the final part of the delivery if the other postal company wishes, but that the other company (e.g. TNT) can do the full end-to-end delivery if they wish. All the remote post that's costly to deliver will of course still be delivered by RM.

I believe you are correct. Previously private firms in competition to Royal Mail chose to collect, sort and distrivute their own mail, but found it cost effective to sub contract the delivery side to RM.

It seems as though the competitors now think it worth finding out if they cna do it cheaper themselves, but only in the urban areas. This is what I always thought would happen. Rm will be stuck with the rural, heavily loss making services while other firms willc ream off any profits there are to be had that currently help to subsidise rural deliveries.

Subsidy will be required to protect these services, and we will all end up apying for it one way or another.

Also as soon as the work is finished he gets to go home and is paid for the hours that were allocated regardless of how early the task is completed. If he works over he is paid overtime - win win !!!

Traditionally, delivery postmen have always worked on a 'job and finish' basis. When I worked in delivery offices, many of the postmen would be in an hour before their official start time in order to get the job done as quickly as possible. So that if their hours were 0500-1218, they actually started at 0400 and finished at, on average, 1100. They also worked through their meal break in order to go home early, so were mostly workinglonger than they should have been overall. Most thought it was worth it to get on the golf course or the beach as early as they could!

Of course, some days they finished earlier, some a bit later, but everyone seemed to aim for a finish around 1100.

One of my friends started and proudly announced he had found the best job in the world as he could complete his round by 0930 on a good day, by jumping over fences and hedges, running up paths and drives, and generally treating it all as an assault course. I told him that was fine while he was young, fit and new to the job, but how would he feel after 5 or 10 years of lugging heavy bags of letters and parcels around for a few hours?

Once the novelty had worn off, he left and went into his father's business instead. He lasted about three months in total. In the end, if you haven't got a sensible approach the job will wear you down!

 

[WillPS]

It is a tough job for sure, definitely not one I'd like to do. Makes me worry a lot about my Dad, especially in the Winter months.

 

[Xenophon PCDGS]

There seems to be quite a demand for the shares and Radio 4 have just stated that the share price looks more likely to be at the higher end of the 260 to 330 price band.

 

[Greenback]

I think that while the shares might go up when trading begins, the long term prospects are not so good. I wouldn't be surprised if much of the demand was from speculators hoping to make a quick buck as with earlier privatisations.

The difference here, in my opinion, is that Royal Mail will not be viable business if the Universal Service obligations continue.

 

[yorksrob]

I think that while the shares might go up when trading begins, the long term prospects are not so good. I wouldn't be surprised if much of the demand was from speculators hoping to make a quick buck as with earlier privatisations.

The difference here, in my opinion, is that Royal Mail will not be viable business if the Universal Service obligations continue.

True. It seems inevitable that allowing individual operators to cherry pick the biggest flows will work wonderfully for large customers but will be disastrous for the universal service.

 

[Greenback]

I can see the privatised company demanding that either the Universal Service goes, or is amended in some way to allow a more elvel playing field, or they receive subsidies to keep it going.

 

[Drsatan]

I can see the privatised company demanding that either the Universal Service goes, or is amended in some way to allow a more elvel playing field, or they receive subsidies to keep it going.

If it is necessary to subsidise a privatised Royal Mail for the Universal Service to be maintained, that would make a mockery of privatisation.

I can imagine the new owner of Royal Mail deciding the business is unprofitable and threatening not to invest anything unless it's backed up by a government guarantee.

 

[ainsworth74]

Isn't Royal Mail profitable? I thought I read somewhere it turned a profit last year...

 

[Greenback]

If it is necessary to subsidise a privatised Royal Mail for the Universal Service to be maintained, that would make a mockery of privatisation.

I can imagine the new owner of Royal Mail deciding the business is unprofitable and threatening not to invest anything unless it's backed up by a government guarantee.

I completely agree!

Isn't Royal Mail profitable? I thought I read somewhere it turned a profit last year...

Royal Mail lost money for a few years. They made a profit last year, but once privatised the company will be burdened by the obligations to deliver to every address in the land which its competitiors will not have to do.

The competition will only seek to collect, process and deliver mail which will make them a profit. I predict that TNT and the like will opffer limited services between and within cities, as they will not see that they can make any money from delivering to villages and isolated dwellings. Maybe towns will also be avoided

The Royal Mail will have to collect, process and deliver everything that is presented to it. Which will probably be those items that other firms don't want ie those that only make a very small profit or a loss. It is difficult to see how this will result in a profitable Royal Mail!

Of course, the fact that Royal Mail made a profit last year makes it appear more attractive to investors. I'm not going to go as far as to sya that acocuntancy methods may have been used to create a somewhat artifical profit, as accounting can create an artifical loss as well, but what happened last year, or the year before may not be a reliable indicator of future growth or profits.

This has all the ingredients of being a disastrous decision. Once privatised, like the railway network it will be impossible to bring it back to public ownership. Also, like the railway, the reason given for privatising the organisation is to allow it to gain access to private capital and reduce the reliance on public funds. Now, can soemone tell me again, how much investment does the UK government have to still put into the railways?

 

[ainsworth74]

I understand, thanks for the explanation

The Royal Mail will have to collect, process and deliver everything that is presented to it. Which will probably be those items that other firms don't want ie those that only make a very small profit or a loss. It is difficult to see how this will result in a profitable Royal Mail!

Sound rather like what happened to the Big Four and then BR when it came to competing with road haulers...

 

[jon0844]

Royal Mail has exactly the same problem BT has, the need to provide everyone with a phone (or mail delivery) while the others all cherry pick.

 

[Donny Dave]

I can imagine the new owner of Royal Mail deciding the business is unprofitable and threatening not to invest anything unless it's backed up by a government guarantee.

The new owners will be everyone who has bought shares, which could potentially include the likes of me and you. Everyone who has an investment in a UK focused fund (pension, ISA, etc) could end up owning a tiny part of Royal Mail.

 

[Greenback]

The new owners will be everyone who has bought shares, which could potentially include the likes of me and you. Everyone who has an investment in a UK focused fund (pension, ISA, etc) could end up owning a tiny part of Royal Mail.

Which, of course, we already own anyway...

 

[WillPS]

Royal Mail has exactly the same problem BT has, the need to provide everyone with a phone (or mail delivery) while the others all cherry pick.

Except in the case of BT that doesn't involve a human being visiting everyone 6 days a week. In fact I doubt the average 'human action per household' figure for BT is 1 a year.

Greenback has got it spot on. Once privatised, it'll be much harder to nationalise it; not without a big step change in the language from the Labour party anyway.

 

[jon0844]

BT might only need to run a cable once to a farm in the middle of nowhere but it can still cost rather a lot of money.

Then once installed, the customer can switch to another provider.

I guess BT Openreach now does this and can effectively charge any provider but many would simply refuse the business. I am not sure BT can in most cases.

 

[Donny Dave]

Which, of course, we already own anyway...

The difference is that the board of Royal Mail currently only answer to the government. Once the IPO is complete, and the shares begin trading, they will answer to all the new shareholders, including most of the staff they employ.

 

[yorksrob]

The difference is that the board of Royal Mail currently only answer to the government. Once the IPO is complete, and the shares begin trading, they will answer to all the new shareholders, including most of the staff they employ.

Or more likely the pension funds and other institutional investors.

Let‘s hope the "shareholder spring" holds out !

 

[Butts]

Or more likely the pension funds and other institutional investors.

Let‘s hope the "shareholder spring" holds out !

Has everyone forgotten the Government removed it's Pensions Liability which ran into Billions

However after my sons first week it seems "Spanish Customs" are abundant within the organisation !!!

The RM owns land and buildings worth hundreds of millions as well most of it freehold....sale and lease back anyone

 

[yorksrob]

Has everyone forgotten the Government removed it's Pensions Liability which ran into Billions

However after my sons first week it seems "Spanish Customs" are abundant within the organisation !!!

The RM owns land and buildings worth hundreds of millions as well most of it freehold....sale and lease back anyone

Ah, but that‘s the Royal Mail pension fund. It‘s the others you‘ve got to keep an eye on

 

[WillPS]

BT might only need to run a cable once to a farm in the middle of nowhere but it can still cost rather a lot of money.

Then once installed, the customer can switch to another provider.

I guess BT Openreach now does this and can effectively charge any provider but many would simply refuse the business. I am not sure BT can in most cases.

BT will get revenue on every landline they install, even if it goes 'Full LLU' (as Sky/TalkTalk do most of the time), they'll get a monthly bit of revenue for it.

I would suggest that there are not many farms which do not have an existing connection. In any case, the flat fee Openreach charge is designed to cover the cost of an average installation - I would guess that means in most cases it costs less than the flat fee to compensate for the few that cost more.

 

[telstarbox]

I would suggest that there are not many farms which do not have an existing connection. In any case, the flat fee Openreach charge is designed to cover the cost of an average installation - I would guess that means in most cases it costs less than the flat fee to compensate for the few that cost more.

Which brings us neatly back to Royal Mail, where the first and second class stamp prices cover the 'average' cost of delivery. Posting a letter from one London address to another will obviously be cheaper than London to the Shetland Islands.

 

[Roverman]

I can see this all going horribly wrong and we, the taxpayer, will be left to sort the sorry mess out by paying £1 for 2nd Class and £2 for 1st Class post. Parcels will rocket up to a minimum of £10 (killing off most of Ebay) and deliveries will be once a week at their convenience.

However I don't feel sorry for all the greedy fools who have been drawing out cheques of £10,000 a time to buy shares in the enterprise.

 

[Eagle]

I can see this all going horribly wrong and we, the taxpayer, will be left to sort the sorry mess out by paying £1 for 2nd Class and £2 for 1st Class post. Parcels will rocket up to a minimum of £10 (killing off most of Ebay) and deliveries will be once a week at their convenience.

Royal Mail will continue to deliver daily even once the shares are fully sold off. It has been written into law that RM must provide a daily service as they do currently (the same way that BT must provide a landline to everyone).

 

[WillPS]

Royal Mail will continue to deliver daily even once the shares are fully sold off. It has been written into law that RM must provide a daily service as they do currently (the same way that BT must provide a landline to everyone).

And said law cannot be changed?

 

[Xenophon PCDGS]

And said law cannot be changed?

Do you envisage such a law change ever being passed ?

 

[underbank]

It has been written into law that RM must provide a daily service as they do currently

As if that happens now anyway!

We get normal deliveries just 4-5 days per week, not 6, in our village (within 5 miles of a city so not out in the sticks). My office gets dozens of items of post every day, yet 1 or 2 days per week we get nothing, then get twice as much the next day. From my desk, I can see the village square where the postman parks his van. 1 or 2 days per week, he simply doesn't come. That's the reality of today's nationalised postal service!

It's a long time since there's been a decent RM postal service. Far too much gets lost or damaged in the post and the idea of first class "next day" delivery for those outside the major cities disappeared long ago.

We already have a two tier system of city versus non city - it's just that everyone pretends otherwise!

 

[Xenophon PCDGS]

It does seem that the delivery of letter mail is a gradually declining part of the whole of the business. Just look how electronic mail has developed over the years to see the reason for this. Many utility bills are now downloaded these days by consumers.

The parcel business strangely is developing as a result of electronic ordering and subsequent goods delivery.

 

[jon0844]

Parcels/packets are clearly the way forward, and as an Amazon customer I'm noticing more stuff is coming with Royal Mail than before.

Amazon still use carriers like Yodel and others (many that are useless - such as delivering at about 6.59pm or even showing a package as delivered online, but it doesn't arrive until the next day - which I'd consider to be quite fraudulent).

It's good to see that the Royal Mail is clearly offering something to the likes of Amazon that others cannot, and I'd hope some of that is the terrible feedback that Amazon gets when people have so many problems with the other carriers that might have cheap rates but don't deliver the goods (sic).

Ultimately, Royal Mail will have to offer more competitive prices to win business but if it can do that, it should be able to survive.

Letters are less and less important for most people. It's basically junk mail for me now (and even that is now mostly standard stuff the postman inserts, so not directly addressed to me), or letters that have to be issued (such as quarterly/annual statements from banks or financial institutions). A change in the law to allow all companies to stop sending even those will have another impact on letters being carried.

And then there are cards. I guess that people still like to get real cards, even if ordinary letters are more likely by email.

 

[Butts]

It does seem that the delivery of letter mail is a gradually declining part of the whole of the business. Just look how electronic mail has developed over the years to see the reason for this. Many utility bills are now downloaded these days by consumers.

The parcel business strangely is developing as a result of electronic ordering and subsequent goods delivery.

I still like to get "real letters" delivered each day, it's nice to have something to open (even a bill).

Keeps with my other luddite tendencies regarding an aversion to Kindles for books and online as opposed to real newspapers.