Industry in brief DIRECTOR OF STRATEGY & POSTAL AFFAIRS, CHARLES NEILSON PROVIDES HIS REGULAR ROUND-UP OF INDUSTRY NEWS.
Recommendations submitted to Ofcom
In its annual Communications Report and review of the postal sector Ofcom, the UKmarket regulator, outlined just how important direct mail and other business-related products are to Royal Mail and post generally. ‘Three-quarters of letter revenue comes from business andmarketing mail, and less than a tenth frompersonal letters,’ said the Ofcom report. ‘The proportions of letter revenue by application have remained fairly stable for a number of years. Business mail, which is primarily made up of transactional mail such as bills or statements, accounts for nearly half (49%) of all letter revenue. Marketing mail, which includes addressed advertising, accounts for 26% of all letter revenue.’ Six in ten adults (59%) say they are very or fairly reliant on lettersandcardsasawayof communicating but the use of digital substitutes remains high. As a consequence, mail volumes fell by 3.7% to 12.2bn items overall. In its review of the parcel sector Ofcom identified the growth in online shopping as the key driver. With almost a quarter of adults (23%) saying they prefer to shop online, Royal Mail estimates that parcel volumes in the UK will grow at 4% per year over the medium term. In 2015 UK adults sent on average 6.6 postal items per month – of which an average of 1.2 items were parcels. Whistl’s letter volumes posted by our customers have remained largely stable over the last few years and our share of the daily postbag continues to climb and now exceeds 30% of total volume. Whistl’s packet and parcel volumes continue to grow rapidly – up 20% from last year. Addressed letter volumes changing
Here at Whistl we have re-iterated our view on the changes that we feel need to be introduced by the sector regulator Ofcomas summarised below. We would certainly like to see more stability in the market with a termof at least five years and a limitation on Royal Mail’s ability tomake unilateral contract changes. We would also like mandated access to a wide range of services as more competition would benefit consumers by creating choice, driving efficiency, and promoting innovation in postal services. Our full set of proposals include: • Stability in the market with a termof at least five years and a limitation on Royal Mail’s ability tomake unilateral contract changes. • Mandated access to a wide range of services as competition would be of benefit to consumers of postal services by creating choice, driving efficiency, and promoting innovation. • Mandated access in the tracked/standard parcel area and in areas such as D+1, upstreampoints, PO counters and sale of goods viameters will deliver much-needed choice for users of postal services. • Develop a better way for requesting new services fromRoyal Mail which is much more even-handed, effective, speedy and transparent. • Consider a separate wholesale business unit run independently of Royal Mail to deliver some of the improvements that the postal market needs. • Eliminate the distortion on which wholesale customers and retail volumes enter the Royal Mail network to ensure provision of service on the same arms-length terms for all users of the network. • Royal Mail Wholesale needs to be appropriately resourced and incentivised to expand the areas in which access operates. • Set an appropriate access price cap to protect access customers fromany exploitative pricing going forward which of course flows through to the retail prices. • Ofcom should set an explicit efficiency gain target for Royal Mail and set out the consequences for failure. • Reduce transactional mail prices to those of advertisingmail. Ofcom is set to issue a statement on the regulation of Royal Mail in the coming months.
10 Whistl Magazine • Autumn 2016
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