27 July 2009 - Sarah Sharpe - © Hellmail Postal News

Dutch-owned TNT NV, has reported 60% a fall in net profit for the second quarter, mirroring a similar fall to that of Deutsche Post DHL as the global economy continues to depress express deliveries. A drop in consumer spending, the collapse of some retailers and restructuring of supply chains has had a significant impact on both German and Dutch operators and it is unclear just how much the economic crisis will affect the Royal Mail Group in the UK.

Steve Lawson, editor for Hellmail postal news said:

"We highlighted our concern earlier in the year that with DHL's withdrawal from the States as well as numerous depot closures in the UK, that this was going to be a difficult year for operators. The decline in mail volume is yet another problem faced by the entire industry.

"It would be fair to say that operators have been trying to keep an optimistic tone throughout the year but these are grim figures and it could be some time before we see an upturn in what is a very depressed market. It seems likely therefore that this will also be an increasingly difficult year for the Royal Mail, and far worse perhaps than has been predicted."

TNT recently announced it would be shedding 11,000 postal jobs to save the company around 395 million euros. 2,100 jobs have already been lost in its express sector with a further 1,260 jobs expected to go.

The depressed market also scuppered plans by Lord Mandelson to sell a part share in the Royal Mail this year, an idea aimed at securing investment capital and commercial expertise. The future for the Royal Mail pension fund which was to be underpinned as part of a partial buy-out now looks uncertain. The resumption of industrial action at Royal Mail over disagreements with the CWU on the modernisation plan is making it difficult for Royal Mail to stick to its recovery plans and some predict more mail centre closures and/or job losses as well as sweeping changes it its existing pension arrangements unless additional investment can be found.

The Communication Workers Union, which wants Royal Mail to remain wholly in government ownership, is calling on Royal Mail to begin further talks over phase 4 of its modernisation plan and for the government to completely abandon its commitment to a strategic partnership or see further industrial action. Both Royal Mail and the government have refused to back down over what they see as essential changes needed to transform the business.

Lord Mandelson said:

"An agreement has been reached twice on the deployment of new machines. but on both occasions, the wording of those negotiators agreements has been rejected by the Union's postal executive committee. Some local branches indeed, are now claiming that the 2007 agreement was only for one year and wish to go back to the old practices that pre-dated the agreement itself. I remind you, the TUC stood as guarantor over that agreement.

"For several months now, the CWU has instructed its representatives to refuse to agree anything through the industrial relations framework. This is why we've seen these spate of strikes, notably in London. Essentially they are boycotting the agreed process for making change in the Royal Mail.

"I realise that this is a very serious charge to make, but I just look at the facts, and look at the behaviour, and I'm afraid any other conclusion is impossible to arrive at." he said.

The Communication Workers Union accused the Royal Mail of provoking strike action by being unwilling to engage in further talks.

London divisional rep Mark Palfrey said: "Our members are not going to allow Royal Mail to keep imposing change by diktat.

"We want the company to sit down and negotiate change with our union, but their current stance is giving us no other option but to take strike action in defence of our jobs and the future of our industry." he said.

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