Helping Us to Save £££'s (Royal Mail)

Member Name: blackjane

Product:	Royal Mail
Date:	14/10/01 (177 review reads)
Rating:

Advantages: Relatively reliable

Disadvantages: Overcharging in certain parts of the business, Competition required to even out anomalies

Over the past twelve months the government has finally decided to introduce greater levels of competition into the postal market under the 2000 Postal Services Act. Royal Mail (or the Consignia Group as it is now officially known) has not surprisingly become defensive over the effects that future changes may have on them, their employees and their services.

In order to address the issues that the newly named Consignia Group are currently facing I would like to take you back about twenty years to 1981.

Around this time British Telecom were still operating as a monopoly and we were all paying well over the odds for our telecommunications services as a result. The majority of people still rented their telephones and with no hint of competition there was no incentive for services and more importantly prices to improve. The British Telecommunications Act was introduced in 1981, which paved the way for increased competition in a market where one player had been stifling development and overcharging its end users.

Twenty years on and much has changed. Firstly Mercury (remember them?) and then cable companies, and now, seemingly, every other Thomas, Richard or Harriet began to offer telephony services. Ask yourself this: who has benefitted most from these changes? BT certainly hasn't, as it is nowhere near as profitable as it once was, but at least its activity is subject to proper competition in the marketplace. As consumers we now get a much better deal and product and service innovation has been possible, mainly as a result of the competition that now exists.

So, after permitting me to quote this example, what comparisons can now be drawn with Consignia?

In a typical response to the ongoing changes there has been a 'dig our heels in' trench-like stance. Obviously there are going to be big changes to the way that they currently operate, and if Consignia are to continue to survive then they need to develop and grasp
these changes. Other operators are now permitted to apply for licences to deliver post and some, including the likes of Hayes and the Dutch Post Office, have already done so.

The response that has been observed to these new developments is a concern that competitors will naturally try to cherry-pick the most profitable parts of the service. So what? If certain areas are highly profitable, then surely the charges at present are too high and competition will smooth out some of these anomalies.

The other key argument is that deliveries to outlying areas, that lose money at present, could be at risk. This may be true, but despite the name change, Consignia are still an industrial dinosaur of prehistoric dimensions. The introduction of competition will ultimately permit cost and efficiency savings that will mean that savings in one part of the business will be able to protect other areas. Innovation will be a key factor in ensuring this can take place, but this can only be done by joining the revolution rather than burying their corporate heads in the sand.

No-one can pretend that all the changes will be beneficial. However, on balance the postal delivery map in twenty years time, subject to a firm but fair role from an industry regulator (PostCom in this instance) should be much improved.

Many of the same fears were raised when the operation of the telecoms market was addressed in this way, but thanks to stringent regulation of the market that allowed competition to flourish, today's market is in a much better state of affairs than it once was. Consignia must adapt or die, and to do this one of the most archaic businesses in the country needs to be brought, kicking and screaming if necessary, into the 21st century. Half of all the time lost through industrial action each year is still courtesy of postal workers and this is just one area that needs to be addressed.

You can be certain that the Royal Mail of the past, und
er its new Consignia banner, will be a very different company in twenty years time. however, if it doesn't come to accept the levels of change that are required it may simply become extinct.

{An original Dooyoo opinion
© Blackjane 2001)

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