DM rallies to fight Royal Mail price hikes

By Simon Nias, Thursday 16 December 2010

Be the first to comment

DM printers are rallying support to fight Royal Mail's proposed price hikes, ahead of the 7 January 2011 deadline for Postcomm's consultation, and have called on all mailing houses to gather evidence of the catastrophic impact the rises will have on mailing volumes.

ef61b7fcb104686b911bd4ca0aeec643

Royal Mail's proposed price hikes could decimate mailing volumes, buyers have warned

Under the proposals, bulk mail users could face price rises of up to 19%, while downstream access (DSA) providers will be charged an extra 15% by Royal Mail.

Postcomm has said that it is "minded to accept Royal Mail's request" and the only hope of reversing that decision is to submit sufficient evidence of the potential harm the price rises will cause, to Postcomm, ahead of the January cut-off.

According to DMA head of postal affairs Alex Walsh, the best bet printers have of overturning the proposal is to collect evidence from their clients of what effect the increases would have on their mailing strategies.

Walsh said: "The most optimistic view is that we will see a reduction in volume, because nobody's budget is going to get any bigger, but the worst case is that this will accelerate clients' switch to other media.

"[Royal Mail] may get away without losing a huge amount of volume in 2011, because for business and bulk mail they still have a captive audience, but once that process has started, it is irreversible – even if prices come back down the volume won't return."

Howard Matthews, chief executive of NEMC, said that the response from his clients had confirmed that the level of the cuts would have a dramatic impact on mailing strategies.

Matthews urged all UK mailing houses to contact their clients to collect responses to submit to the Postcomm consultation, either directly, or through the DMA, which is in the process of collating responses from the industry.

One NEMC client, print manager Intygra PPL Nottingham, said that its clients currently spend approximately £4m on post to put around £2.7m of product through the system and warned that a 15% hike, equivalent to around 2p per product on Mailsort 1400, would have a "huge impact".

Simon Flear, managing director of Intygra PPL Nottingham, said: "In the current economic environment [our clients] will not spend the extra. In the short term they will reduce volumes, in the longer term they will accelerate their shift in route to market.

"Each instance of postal disruption results in a hard reset of DM volumes. And, like it or not, DM subsidises the other prices which RM charge. An increase of 4.5x inflation, when many businesses are still living with year-on-year selling price deflation, will not run.

"While it would be against my business’s interests, it would be a better answer for RM (and probably UK Plc) if the regulator looked at a 20% rise in charges for the final mile and kept the MS prices down."

Printers have already slammed the proposal and warned that it could drive clients to use other medium, while the DMA has warned that it could completely backfire and threaten the Universal Service (due to the fact that bulk mail subsidises the service).

Latest comments