EXCLUSIVE: Post Office discusses potential exit from exclusive mail terms with Royal Mail

The Post Office is ‘very close’ to finalising a new 10 year deal with Royal Mail that may allow post offices to handle parcels from other carriers.

A meeting between PO managing director of mails and retail Mark Siviter and nearly 100 subpostmasters, organised by the NFSP took place on 17 November. Sources at the meeting told RN that Siviter had claimed to be in the final stages of negotiating a deal and contested comments around plans for a rollout of Post Office parcel services into Payzone stores.

The meeting came just days after the Times reported that Royal Mail is set to lose its exclusive Post Office mails partner status. While Siviter refused to say whether the new Royal Mail deal would renew its exclusive rights as the Post Office’s parcel partner, he is reported to have added: “Should we be working with more carriers, we would launch it into the network when we can do it in a managed way.”

He also had stern words for those across the negotiating table at Royal Mail, highlighting its parcels capacity issues and stating it would take a considerable period of time to correct as it transforms from a letters led business to a parcels led business. He was asked about Royal Mail’s service levels and allegedly urged subpostmasters to submit their views on to Ofcom’s regulatory review of Royal Mail, which has a 23 December deadline for submissions. Siviter also suggested Royal Mail could face further fines from Ofcom, following a £1.6m penalty handed down by the regulator in July for late deliveries last year. The comments come a month after tense exchanges between Royal Mail and post offices over a new service that could poach PO customers.

Retailers in the meeting challenged Siviter over the space and resources required to allow multiple carriers to drop off and collect parcels at PO sites. The mails boss suggested that if more carriers were added, additional parcels would only be sent to stores large enough to handle them, while teams at the Post Office would work on new space-saving solutions and processes to help stores adapt. Siviter allegedly refused to give a deadline on when the new mail agreement would be signed, but was reported to have said it was “very close” and that he was “under immense pressure” to get the deal across the line.

Commenting on the meeting, a Post Office spokesperson said: “We are working with Royal Mail to secure a new agreement that will continue our relationship, while providing customers with the best possible convenience.”

Siviter was also challenged on a video interview given by Payzone director Martin Rouse to analysts Kam Media where it was suggested Payzone’s soon to launch terminal could handle simple Post Office parcel products. Siviter accepted there was an ongoing project examining how to improve its network coverage but is said to have claimed he was not aware of any plans to take Payzone devices and put Royal Mail products on it.

However, speaking towards the end of the meeting, PO head of network Andrew Kingham is reported as confirming Post Office’s intentions to add its services into its Payzone subsidiary stating: “I am aware of Martin Rouse’s interview with Kam Media, he was speaking of where we want to go, not where we are.”

The Post Office spokesperson later told Better Retailing: “Payzone is looking at increasing the number of its retailers that can offer HubBox and/or Hermes click and collect services, which are already operated by a small number of Payzone retailers. The new terminal trial, starting in January, will not include any Royal Mail parcels or mails services.”

Owner of Hayling Island Post Office in Hampshire Andrew Altendorff said he was optimistic about the prospects of the mails deal. “I think he [Siviter] would like to see it finalised before Christmas, but it’s important to think carefully, because it will impact the next 10 or even 20 years of the Post Office. I hope the Royal Mail deal continues, we both have a lot to offer each other and we know how eachother work.”

However, Communications Workers Union branch representative and shop owner Mark Baker said he expected an end to exclusive terms with Royal Mail, which he described as good news. “I’m up for more mail carriers but we know there will be lower payments from Royal Mail without exclusivity and this will filter down to our products, it Is up to the Post Office to ensure new business makes up for this.”