Thursday, July 8, 1999 Published at 12:20 GMT 13:20 UK
Business: The Company File
Last post for old-fashioned carriers
Collecting and delivering your letters could soon be a small part of the Post Office's business
The image of the cheery postal worker hand delivering mail to every home belies the increasingly cut-throat nature of the international postal business.
The UK Post Office is keen to become a major player, and the proposals announced on Thursday by the government should enable it to start flexing some commercial muscle.
But it is already late into the game, as some of its Continental rivals have already built up big power bases as providers of postal services across Europe.
It has taken a 49% stake in Guipuzcoana, the Spanish and Portuguese parcel delivery company. Deutsche Post has now made nearly two dozen purchases in the past couple of years.
So what is causing this shift from cosy national mail service to acquisitive European conglomerate?
Like so many other industries, Europe's postal providers have realised they must adapt to survive.
Some have been quicker than others, notably Deutsche Post. It has a 25% stake in DHL Worldwide Express stake, and is now Europe's biggest parcel service.
Moving into e-commerce
It also has interests in shipping, warehousing and call centres, and has just launched an e-commerce website encouraging electronic traders to use Deutsche Post to deliver their goods.
That £300m purchase marked the Post Office's first foray into the international arena, but also raised some issues which look likely to recur.
There was concern that the Post Office initially refused to give details of the deal, including how it was funded.
That may change if it becomes a public limited company under government proposals, but the question of using the benefits of state monopoly to make fund private purchases remain.
Competition authorities are keeping a close eye on how the market develops, but that has not stopped the Post Office drawing up a £1.5bn shopping list with eight targets on it.
But the most important thing is guessing how we will all be communicating in the future. A survey suggests that the recent growth in letter volume is starting to slow.
Maintaining core business
And the Swedish post office is so convinced that everyone will soon communicate electronically, that it has given everyone over the age of six free e-mail addresses.
Also, for carriers like the French and British post offices, which are new entrants to the international field, there is the challenge of expanding while maintaining their core business.
As one observer noted, it is little use a post office ruling the world if customers in its home country are neglected.
And there are sure to be hungry rivals ready to pounce on any gaps that appear in this increasingly competitive market.
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