Does Parcel Delivery Have To Cost A Packet

Does Parcel Delivery Have To Cost A Packet

by David Redmond on 24 Nov, 2011

Businesses large and small alike are fighting to save every penny they can, but hikes in postal prices are hammering businesses and personal customers hard.

Earlier this year, Royal Mail declared another rise of prices on stamps and parcel delivery costs. In 2000, the price of a 1st class stamp cost only 27p but has risen by a staggering 70.3% to 46p in 11 years. This year has seen the largest increase, with a 5p rise from the 4th of April. Standard Parcels over 2kg also saw an average increase of 8% after April’s price hikes. Sending a standard 2-4kg parcel to UK address will now cost you £7.62.

Royal Mail’s rapid increase in prices could be a consequence of the postal regulator not conceding to Royal Mail’s desire to raise prices gradually, however.

Moya Greene, Chief Executive of Royal Mail, stated that they needed to invest heavily to modernise operations before sharing her sentiments with reporters: “No-one likes to pay more and we regret having had to take these tough decisions on pricing. After these increases, we will continue providing value-for-money as our prices will still be among the lowest in Europe.”

Royal Mail alone claim to send around 62 million items to 28.8 million UK addresses every day; many of which require same day delivery. With so much postal traffic, competition is fierce and money-saving postal services are in high demand. Price comparison websites such as MoneySupermarket and Compare the Market have become a common starting point for those seeking a bargain, and new websites offering discount postal rates by working with a multitude of postal services are proving tough to beat. Despite Royal Mail’s status as the chief postal service, they are often undercut by subjacent yet more efficient competitors who offer parcel delivery at reduced rates.

However, a recent survey carried out by the postal consultancy group WIK Consult showed that competition in the postal sector has led to positive results in other European countries. The study showed that, by putting pressure on the incumbent postal service, competitors actually moved the postal service forward as a whole by acting as a catalyst for modernisation.

TNT’s Chief Executive Officer Nick Wells remarked: “We want a strong Royal Mail but it has to modernise to meet the needs of the market today and in the future and also be open to competitive forces that will ensure its future efficiency and prosperity.”


About the Author

David Redmond

David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.