TNT Post challenges UK last mile delivery operations

TNT Post UK, the UK division of PostNL, is extending its reach in a move that illustrates that the soon to be privatised Royal Mail is gradually losing its monopoly on ‘last mile’ delivery in the UK.

TNT Post UK has announced it will start what it calls an “End-to-End” delivery service in Manchester in November. Operating from 11 local depots, the company will offer services to both domestic and business locations. TNT Post stated that it will ‘track & trace’ every item delivered, presumably developing the ‘Ontrack’ system that is already in operations elsewhere within TNT Post UK. The level of employment will also be substantial with over 1,000 staff being recruited to operate the system.

The Manchester initiative now complements the existing delivery service in operation in west and south London which commenced last year. TNT Post is known to be conducting trials and research in other parts of Britain, largely in major urban areas.

The development of a last-mile capability is significant, not least because TNT Post is a major player in both the ‘bulk mail’ and ‘addressed mail’ segment of the wider mail market; which was previously reliant on Royal Mail’s local delivery capabilities. The implication is that TNT Post now has the potential to increase its already significant market-share, largely at the expense of Royal Mail as a result of a more integrated service offering.

Private sector competitors such as TNT Post and UK Mail have already demonstrated the ability to compete with Royal Mail in other segments of the mail market. ‘Last mile’ operations have been perceived as the most difficult and expensive sector of the market to enter and if TNT Post is able to be competitive the wider implications could be significant for any future private sector Royal Mail Group. It could also set an example for other national markets that the national mail monopolies do not necessarily have an impregnable bastion in last mile operations, particularly as the mail business restructures around e-commerce.