The Future of Regulated Mail, and Ecommerce Shipping

Loss of the Letter

With the advent of email, postal services worldwide have seen a massive decline in the quantity of letters. In the U.S., First Class mail volume is 25 percent less than in 2001, as shown in this USPS table. A lot of the postal services’ volume today is at the little package industry, driven by ecommerce retailing.

Both the USPS and Royal Mail are state-owned businesses and have traditionally enjoyed a monopoly in the postal industry. However with decreasing revenues and increasing losses, the two nations are now searching for ways to save money — the USPS lost around $8.5 billion in 2011, and Royal Mail has lost around #1 billion in the past four decades.

In 1969, Royal Mail — formerly a government department — has been made a statutory corporation and after that, in 2001, a public limited company, known as Royal Mail Holdings PLC.. This ready it for privatization, although the government remains the sole shareholder right now. Royal Mail Holdings PLC has been heavily regulated until now by a postal regulatory body. But this changed at the end of 2011.

Royal Mail Not Heard

Royal Mail has argued that it was made to provide First Class mail delivery nationwide at reasonable prices. To reduce costs, it asked to remove compensating commercial shippers for damaged or lost non-tracked mail products, since no additional U.K. carrier supplied this. The regulatory body granted this petition in late 2011, with reimbursement for business users completely eliminated. While online retailers opposed this, given how long and slow the claims procedure previously was I am doubtful whether a lot of them ever bothered to submit claims for damaged or lost goods.

Royal Mail’s second petition involved the mailing of little packages. It claimed that the controlled pricing it was made to follow along with these packages wasn’t profitable. It contended that since it no longer held a monopoly, it needs to be able to set its own pricing. The postal regulator consented to this request.

As of April 2, 2012, just stamps bought in a U.K. post office are controlled. Even then, the ruler allowed enormous price increases of around 70 percent, with a mild bundle increasing from #1.58 to #2.70. For companies, online retailers and many eBay sellers who offer free postage, the shift is very likely to strike margins very hard. The deregulation also suggests that future price increases can be made without consultation. Full privatization is currently also in process, after a change in the law this past year.

In U.S., Reduced Services

In the U.S., there’s been similar pressure to lower costs and enhance earnings at the USPS, though the proposed changes revolve around reducing services as opposed to raising prices. In December 2011, the USPS proposed closing of hundreds of mail processing facilities, together with quitting Saturday mail deliveries.

USPS is also boosting its direct mail services — otherwise called unaddressed mail, or spam email — in an attempt to improve profits. It delivers more direct mail than addressed things. Given the present losses, unless the U.S. government is ready to keep on subsidizing the USPS, more changes are likely to happen.

We have all been appreciated cheap postage for several years. Just with the decline of this correspondence has it become apparent just how expensive it is to deliver bundles. Many companies and consumers from the U.K. are upset by the changes. But paying less than #1 to deliver anything from 1 end of this country to another is unbelievably affordable.

Amazon’s Digital Lockers

So if postal services in both the U.S. and U.K. are fighting, what’s going to happen? There are lots of competitors in the package-delivery sector. However there are also more intriguing delivery solutions. Since September, by way of instance, Amazon has been installing digital lockers in shopping malls and shopping centers, allowing clients to select orders. Amazon can send to only one address and there is no need for anybody to be in when the courier arrives. While there are now many places with these lockers fitted, they are not common — yet.

Lifestyle Couriers

Another choice is that the”lifestyle courier,” generally a part-time homemaker searching for a little more cash. Usually, a professional courier will deliver up to 30 or 40 parcels into the lifestyle courier’s home address. The lifestyle courier is then allowed 3 to 4 days to send themusing their own car. It’s like a miniature postal route and it works mainly as a result of low wages some are ready to work for. From the U.K., these salaries can be as little as #0.50 per parcel delivery, which as a self-employed employee needing to taxation, insure and put fuel in a vehicle, will hardly cover expenses. Suffice to say, delivery standards are reduced, evidence of delivery is frequently non-existent and the claims procedure is long and hard.

Summary

In short, the majority of the delivery burden has been put on the ecommerce merchant, who not only wants to make sure goods are sent correctly, but is also likely to wind up paying for any replacements lost in transit as shipping suppliers continue in their race-to-the-bottom on prices.