The UK Postal Service

Postcomm has stated in its Annual Report ( 2001 ) of ” moving to a de-regulated environment ” by 2006. Who will be responsible for regulation then ? Equally Business economics dictate that profit motivated companies are more likely to invest in profitable services, e. g. business mail, whereas delivering a postcard to the Isle of Skye may not be top priority. Business and the rich may be prioritised by competitors leading to reduced service levels to the less well off. In addition Consignia has committed itself to i?? 1. 2 billion of savings over next year

( Consignia annual report 20001 ). One way to achieve this would be to raise prices. Following a similar exercise in Sweden the cost of a first class stamp rose by almost 40% ( Business Week, 9th August 2001 ) t is normally not good business sense to invest monies in low-returning services. However we must also recognise the many benefits to customers in a competitive market. Increased competition brings increased choice and tends to present better value to the end user. Competitors recognise that they must be more responsive to customer needs.

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Also new competition should lead to new employment opportunities and local investment. The Government generates revenue via corporation tax, increased disposable income, job creation and dividends. Consignia paid i?? 93 million to treasury as dividend in 2001 ( Observer 3rd Feb 2002 ). Our postal service represents good value for money and provides a good starting point for future competition to base their prices upon.. Presently UK has the third cheapest postal service in the EU (Business week, 9th Aug 2001).

Whilst seeking an open market Postcomm is also “committed to ensuring the provision of the universal service. ” ( Competition & Regulation Framework report, 31st Jan 2002 ) Consignia has already shown it’s willingness to fight for the universal service by obtaining a i?? 5. 5 million settlement with rival ( Hays ) in March 2002. Hays had attempted to cherry pick the profitable theatre/ concert ticket delivery service. ( BBC News, 190302 ). More suppliers should lead to increased marketing thereby increasing customer information which in turn should lead to better informed choices.

A competitive market can also provide more transparency in relation to supplier standards and conduct via advertising, prosecutions and word of mouth. While speculating as to possible affects what lessons, if any, can we learn from the past ? While other national services such as Gas and Electricity have already made similar transitions Consignia is arguably more vulnerable as the set-up costs for potential compeditotors are less. Lessons can however be learnt from the telecommunications industry in that no industry can support an over-load of suppliers.

Similar opening up of postal markets have occurred in both Sweden and New Zealand and over-all the effects have been positive ones. A report published in January 2002 found that both countries ” managed to maintain a profitable operation with no deterioration in the quality of service “. However along with learning from past experiences the postal market must anticipate and embrace future developments. By 2003 all payments normally made via post offices will be done electronically. While this may lead to job losses it will also require employee training and investment in new technology.

With all new technology and procedural changes there will be security considerations which must be addressed. Obviously with the market due to be totally liberalised within four years the response of the present UK postal service will have to be swift. There is also a possibility that the postal service could be merged with other public agencies in order to achieve cost savings and service targets. Consignia are presently investigating the viability of selling some postal services via train station counters.

(Watchdog, BBC2, December 2001. ) As previously mentioned outsourcing of some services to private hands may also happen. New technology will play a big part in the future development of our postal service as we strive towards achieving operating efficiencies. Machine processed mail costs 40% less to handle than manually sorted items ( Business Week, 9th Aug 2001 ) Further advances will continue in the areas of internet use and telephone banking which may present both marketing opportunities and challenges..

The UK postal service is undergoing it’s biggest change in almost four hundred years and will need to approach it in the right way if it is to survive For various reasons the current provider, Consignia, is not performing adequately. The process of liberalisation will take place over next four years or sooner. While there may be some negative affects the majority of customers should benefit through better choice, reduced prices and better service. While there are valuable lessons to be learned from similar liberalisation within the UK other countries have benefited from the opening up of their postal markets.

Developments in the future must be anticipated and responded to. However it appears that the UK postal service will benefit from becoming part of a competitive market. An international report which examined the impact of competition in the postal sector concluded that ” where liberalisation has occurred, there is a net benefit to the industry and a clear benefit to customers ” and ” in no situation has the universal service been compromised by the introduction of competition. “

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