TNT POST is further encroaching on Royal Mail territory by launching an end-to-end delivery trial in London as part of a long-term plan to rival the government-owned postal service.
Following a successful trial in Liverpool, TNT postal workers will hit the streets of west London from mid-April to test the waters for extending the company’s current collection and sorting service to include delivery.
But the mail service, owned by Dutch company PostNL NV, said it will not be able to roll out the service permanently unless “barriers to competition are removed.”
Royal Mail is exempt from paying VAT on “final mile” delivery – the last stage of the process – making it difficult for other companies to offer an economically viable rival service.
TNT Post said: “The company has a long held ambition to launch its own delivery service within the UK but is unable to realise this strategic goal until the Royal Mail VAT exemption on final mile delivery is removed.”
TNT Post chief Nick Wells added, “We need the government to announce that it is going to allow fair competition” in order for the postal business to invest in infrastructure and “create thousands of jobs.”
A TNT spokesperson told City A.M. the company would absorb the extra VAT costs incurred during the trial but said this was not viable in the long term.
The company also announced yesterday it won a contract from Tesco which will see TNT Post handle 180m items per year. Its other clients include Barclays, Lloyds TSB, Sky and BT.