Couriers' chance to play postman

Delivering change: Now monopoly is suspended, rival firms may step in as workers join London Underground in further strike

The suspension of the Royal Mail's postal monopoly produced a slew of claims yesterday that independent courier firms could match it on price and reliability. Industry analysts believe that the Post Office could face competition from a wide range of organisations - but only if its monopoly is abolished permanently and private operators are allowed to "cherry pick" the most profitable parts of the business.

Amtrak Express, an independent courier firm based in Bristol, said it was confident it had the network to handle local deliveries on a large scale, and TNT said it could compete on both price and quality if the Royal Mail's monopoly were replaced by a duopoly.

But analysts said that small franchise operators, such as newspaper distributors and even milkmen, were more likely initially to enter the market than the "big four" international express couriers - TNT, DHL Worldwide, United Parcel and Federal Express.

Roger Gamlin, marketing manager of Amtrak, said it had 120 collection depots around the county and a fleet of 1,000 vehicles on the road. But to compete fully with the Royal Mail the firm would need to have 120,000 collection points - otherwise known as post-boxes - a fleet of 30,000 vans, 140,000 postmen and sorters and the ability to handle 70 million items a day.

Post Office executives fear that if the present one-month suspension is extended to three months, as the Government has threatened, the monopoly may never be fully restored, which would allow private competitors to nibble away at its most profitable markets.

That, in turn, could have adverse consequences for the Government. At present the Post Office is contributing almost pounds 1m a day in profits to the Exchequer. If its monopoly on letters costing less than pounds 1 to deliver were ended, then profits would inevitably tumble.

The alternative would be to release it from its obligation to provide a universal service at a uniform price. But that would mean either sharp increases in the price of rural letter deliveries, or a commitment from the Government to subsidise letter deliveries outside the main urban centres.

Andrew Fitzmaurice, business development manager of TNT, said: "We would like to see a duopoly created, with one courier providing a competitive service to the Royal Mail. What the public want is a uniform service at a guaranteed rate. I believe we can provide a service that competes on both price and on quality. During the time of the strike we will see an uplift in business."

But Federal Express struck a more cautious note, saying it preferred to concentrate on its existing intercontinental courier business. "If any of the other big couriers think they can cover every nook and cranny of the UK as they stand, then good luck to them," said Cliff Morley, head of public relations for Federal Express in Europe. "The Post Office does a superb job, probably the best in Europe," he added.

What deters the big players from setting up a system that even begins to compare with the Post Office is the sheer cost - as well as the uncertainty surrounding future ownership and regulation of the Royal Mail.

But operators such as Amtrak, City Link and Business Post may be able to offer local services. Amtrak, for instance, said if something were posted in Truro at 5pm, it could get it to Edinburgh by 9am next day.

Less obvious competition could come in the form of companies in unrelated industries, but with big delivery networks. Possible candidates include WH Smith - which is run by former Post Office chairman Bill Cockburn and has 53 depots serving 25,000 outlets - and Northern Foods, one of the country's biggest milk delivery businesses.