Royal Mail Wants to Charge by Size, Not Weight

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Royal Mail, the UK post office, said this week that it wants to charge customers to deliver letters and parcels according to size rather than weight beginning April 2006.


The new system would make pricing fairer, Royal Mail said, since the size and shape of letters and packages determine collection and sorting costs. For example, people sending small but weighty items such as books currently pay more than those sending large lightweight items such as posters. Similar pricing systems already exist in the United States and several other countries.


Postcomm, the UK postal regulator, is expected to announce a decision in a few weeks.


"Mail prices have been unfair for a long time," said Lorna Clarkson, Royal Mail's commercial pricing director. Starting in January, "customers will have increasing choices about who they give their mail to. They will expect to pay prices [that] fairly reflect the costs that postal companies incur. They will take business away from anyone overcharging them -- regardless of the history behind the pricing."


In January, any licensed operator will be able to deliver mail to business and residential customers. Royal Mail still will be required to provide a universal postal service for First- and Second-Class mail of one delivery and one collection each working day at a uniform price throughout the United Kingdom.


Royal Mail offered a similar plan a year ago but made revisions to accommodate issues raised by business customers. In particular, the new plan treats items of a thickness up to 25 millimeters as standard large letters. Previous proposals set the maximum thickness for standard large letters at 10 millimeters. The revision means fewer changes for companies and individuals mailing items such as CDs and DVDs.


Meanwhile, Royal Mail's price for a basic First-Class stamp rises from 54 cents to 58 cents April 7. Many business-mail services will see smaller increases or decreases as Royal Mail moves toward rebalancing prices to reflect actual costs and prepares for full competition in the market. Price changes include:


· First-Class postage for heavier items will increase 5.2 percent to 9.5 percent.


· The basic rate for Second-Class mail will stay at 41 cents for all customers.


· International prices will rise 5 percent to 6.9 percent.


· Special Delivery, Royal Mail's guaranteed, next-day service, will increase from $7.23 to $7.43 for the basic service. The Special Delivery 9 a.m. service will rise from $13.40 to $15.33.


· Parcels sent by Royal Mail will increase by up to 4 percent.


· Prices will fall for some business-mail services, including mail sent through Mailsort (for large volumes of mail presorted by customers) and Cleanmail (for large volumes of machine-readable mail, sorted by value and presented to Royal Mail in trays by the customer).


The changes are in line with the formula agreed to by Postcomm, setting a three-year below-inflation control for changes to Royal Mail's prices that is valid until March 31, 2006.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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