Business Post deal may put mail trains back on track

Business Post, the independent parcel delivery firm, is in talks to take up a number of the mail trains soon to be abandoned by Royal Mail.

The move would help to safeguard some of the 517 railway jobs at risk as a result of Royal Mail's shock decision to switch the transport of mail from rail to road.

Business Post is understood to be in early discussions with EWS, Britain's largest rail freight operator, about setting up a high-speed mail service between London and Scotland.

Both parties refused to comment, but sources close to the talks revealed that a service could be running by spring or summer 2004.

If a deal can be agreed, it will be a victory for EWS. Royal Mail is an important EWS customer, accounting for 9.6 per cent of the company's revenues. EWS currently operates 49 mail trains for Royal Mail, transporting 14 per cent of Britain's mail. But after 18 months of negotiations Royal Mail announced in June that it was to abandon the railways. The state-owned company claimed this would save it £90m a year.

Since the announcement, relations between Royal Mail and EWS have deteriorated, with the two sides making claim and counter-claim. Royal Mail's decision has also been condemned by the unions and some MPs. This is because the Government is committed to encouraging companies to move freight from the roads to rail as part of its 10-year plan. Despite this, the Department of Trade and Industry has refused to criticise Royal Mail's decision. While it is the sole shareholder in the business, the DTI has said that Royal Mail should be given full commercial freedom.

The plans being discussed by EWS and Business Post would involve the use of Royal Mail's existing rail terminal at Shieldmuir near Motherwell.

However, there are concerns that Royal Mail may be reluctant to give up some of its rail facilities as they could be converted for road use. Royal Mail is unlikely to reverse its decision to move from rail to road, but the company has also been careful to state that "a return to rail for some elements of the distribution network had not been ruled out for the future".

If EWS and Business Post secure a deal, they may first have to contact the rail regulator, Postcomm, to ensure that Royal Mail grants access to its terminals.