Deutsche Post Global Mail (UK) Ltd., a subsidiary of Deutsche Post World Net, late last month became the first foreign postal service granted a license for mail delivery in the United Kingdom by the British regulator, Postcomm.
The license lets Deutsche Post handle up to 40 million pieces of mail a year, about half the amount delivered daily by Britain's national carrier, Consignia.
More competitors are on the way. Postcomm is reviewing a license application from Dutch postal service TPG, and it has awarded temporary licenses to 10 British companies, including Hays Commercial Services Ltd., Securicor Omega Express Ltd., TNT UK LTD. and Express Dairies, where milkmen began delivering business mail to UK households last month.
The government plans to begin awarding seven-year licenses to overseas firms in January and to have a fully competitive market for mail by April 2007.
Postcomm sees the introduction of foreign and domestic competition as a way to push Consignia to streamline operations. Consignia has struggled to cap rising costs and trim its work force. It lost $1.7 billion for the year ended in March.
“We know competition is coming into the marketplace, and we're preparing for it,” the company said, though it offered no specific comment on Postcomm's awarding of a license to Deutsche Post.
Consignia wants to cut 30,000 jobs from its staff of 220,000 over the next three years. It also plans to save $539 million a year by ending its twice-a-day mail service and charging customers extra for letters delivered before 9 a.m.
Postcomm said the temporary licenses are designed to prevent competitors from seriously affecting Consignia's current ability to deliver mail six days a week at a uniform price.
Deutsche Post Global Mail will be limited to handling mail in bulk units of 4,000 items. About 90 percent of this mail will be passed on to Consignia for delivery, with Deutsche Post allowed to deliver the remaining 10 percent.
The German firm's parent company, Deutsche Post World Net, sees Britain as one of Europe's most attractive markets, and it plans to apply for a long-term license to deliver mail there as soon as one becomes available.
Deutsche Post World Net already owns a majority stake in international mail service DHL International and has a postal joint venture in the Netherlands. Deutsche Post issued its first shares to the public in 2000 and is owned 69 percent by the German government.
