01.04.10 - Jersey Post Responds to JCRA
Jersey’s postal regulator, the Jersey Competition Regulatory Authority (JCRA), has announced it proposes to further increase competition in the Island’s postal market, by issuing licences to Hub Europe and Citipost to provide bulk business mailings.
Jersey Post – which earlier this year announced a substantial redundancy programme in response to increasing international competition and declining mail volumes - accuses the JCRA of failing in its obligation to properly assess and evaluate the impact on the traditional postal business, including the sub post offices network.
Although this important “social provision” loses £5m a year, Jersey Post, in common with other national postal operators, finances this from its operations in the much bigger bulk business mailings market, which is already subject to intense international competition.
Jersey Post’s Managing Director Ian Carr said that the JCRA’s decision to open virtually the whole of the bulk business mailings market could result in substantial cuts to future services including a reduction in postal deliveries to every other day and the existing sub-post office network being halved.
It could also mean the loss of significantly more jobs at Jersey Post. Mr Carr said competition from email and other technologies, combined with the recession, had seen letter mail volumes fall by more than 13%, or 3 million items, last year alone and analysts predict global declines of nearly 50% by 2020.
The business bulk mailings market, which is now being opened up by the JCRA to another two operators, is already under competitive pressure from other jurisdictions seeking to attract Jersey’s fulfilment companies and a near doubling of costs from Royal Mail. This has driven Jersey Post’s profits down from £4m in 2008 to £1m last year. It now faces the risk of being unable to fund the £5m annual losses in the letters and sub-post offices network.
Jersey Post is particularly concerned about the timing of the JCRA’s decision to increase competition. Mr Carr stated: “We had demonstrated to the JCRA that we had a four year plan of job cuts and new business ventures which, together with our ongoing transformation programme, could save the traditional postal business from collapse and avoid the high stamp prices and government subsidies seen in other jurisdictions like the UK. But it seems they couldn’t wait. It seems that the pursuit of limitless competition is a more important priority for the JCRA than the future of the social postal network.
“I simply cannot believe that the JCRA has even contemplated this decision before completing its planned second efficiency review of Jersey Post and its first review of the postal and logistics market in Jersey as part of its published 2010 workplan.”
Jersey Post is the only regulated utility other than Jersey Telecom and was confirmed as “an efficient Postal Operator” by the JCRA and its consultants after a major efficiency review three years ago. This, it says, makes it even more inexplicable that additional competitors are being licensed who will attack the only profitable part of what is an overall declining postal market, leaving the loss-making social provision to be funded by Jersey Post or ultimately the taxpayer.