Royal Mail 'in talks' with US parcel firms
Royal Mail 'in talks' with US parcel firms
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Monday, 22, May 2006 07:25
Royal Mail is allegedly in advanced negotiations with US parcel groups the United Parcel Service (UPS) and the Fedex Corporation, over plans to set up a strategic European alliance.
Royal Mail chairman Allan Leighton is still considering which of the two companies to link up with its European parcel operation, General Logistics Systems (GLS), the Sunday Times claimed.
The newspaper said the UK's state-owned postal service provider was keen to use GLS, its most profitable business, to help break into the postal markets of Germany and France.
Quoting a source familiar with the company's alleged talks with UPS and Fedex, the paper said that Royal Mail's attraction to a deal with one of the two companies stemmed from the fact that its European parcels business is unregulated, unlike in Britain where prices are set by a third party.
An alliance with either Fedex, the world's largest air-express carrier, or UPS, the world's largest package delivery company, would reportedly allow Royal Mail to make a big inroad into Europe's parcels business and help boost the finances of the UK postal operator.
Last week Royal Mail confirmed that it is to receive a £1.75 billion bail-out from the government in order to fund improved services and pay off its pensions 'black hole'.
Royal Mail has refused to comment on reports of a deal with either Fedex or UPS, describing the reports as "speculation."
The Sunday Times claims that GLS is currently worth at least £1 billion pounds alone, but that its value could increase under a partnership with either of the two US parcel giants.
Royal Mail's European unit currently handles more than a million parcels each day, mostly business-to-business deliveries across 34 European states.
