An Post may face new competitor in door-to-door mail

Business mail delivery group DX Ireland is considering entering the door-to-door postal market following the implementation of further liberalisation in the postal market.

Managing director Kevin Galligan said the business document exchange firm was conducting a feasibility study with a view to entering the door-to-door delivery market before full deregulation comes into effect.

As of January 1st this year, independent operators are permitted to collect and deliver postal items weighing in excess of 50g, down from the previous threshold of 100g, which was introduced in 2003.

Any independent operator who wishes to deliver items weighing less than 50g door-to-door must charge 2.5 times the An Post tariff of 48c per item, or at least €1.20.

Complete liberalisation in the market is due by January 2009 in line with an EU postal directive.

Several private firms currently compete with An Post in the delivery of larger items door-to-door; however, DX Ireland currently specialises in business-to-business document exchange, which means it is not subject to the weight limits that apply to deliveries to private residences.

Mr Galligan said DX Ireland was now shifting up to 40,000 pieces of mail a night through its 200 document exchange sites.

The firm guarantees next day delivery by 9am once letters are left in its document exchange boxes by 5pm the previous evening. It claims to provide businesses with cost savings of up to 30 per cent on An Post tariffs.

The company is part of DX Services, which is listed on the London Stock Exchange and has an annual turnover of €194 million. Its clients are mostly in the legal and financial sectors.

Mr Galligan said DX Ireland's research indicated that 50 per cent of mail weighs more than 50g and that it would make further announcements later this year on expanding into the door- to-door delivery market.

According to An Post, around 40 per cent of its mail volumes are now exposed to competition.

A recent survey by the Commission for Communications Regulation (ComReg) found An Post delivered 74 per cent of postal items by the next working day in the third quarter of 2005, down 4 per cent on the previous quarter and short of An Post's 94 per cent target for next-day delivery.

In December, An Post said ComReg's decision to turn down its application for a price increase in the basic domestic rate of postage was inexplicable and unfair. It said ComReg was fully aware of the financial losses An Post was incurring as a result of its universal service obligation.