Royal Mail cuts 3% off MailSort service tariffs
7th August 2009
By Matt Whipp
Royal Mail has said it will reduce postal tariffs for its MailSort 3 service, including its sustainability discounts, by 3% from 26 October 2009.
The new rates for the service mean that a 500,000 piece DM campaign will cost around £3,000 less, according to postal services consultants Post-Switch.com.
However, Lance Hill, managing director of print services at 4DM, said it was unlikely that the move would lead to any short-term increase in direct mail volumes.
He said: "I don't think it will have a positive effect on volumes, it will just make people look at cost even further. So if you're a large Downstream Access (DSA) user you might reconsider going back to Royal Mail."
The reduction has ramifications for competition in the broader postal industry, making it more difficult for DSA providers to make a profit when they are still buying Royal Mail services at unchanged wholesale rates.
"Royal Mail is using its market advantage to price competition out of the market, but it's difficult to justify these costs in light of its balance sheet," said PostSwitch.com founder Jonathan DeCarteret.
The move is expected to cost Royal Mail £150m, but will make its service cheaper than those of its biggest rivals, which had previously undercut MailSort 3.
Post-Switch.com said TNT and UK Mail would have to review the price of up to 400m items to stay in line.