Royal Mail opens workshop doors to third parties for SMR

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Royal Mail is opening its workshops to offer service, maintenance and repair (SMR) solutions.

The business has around 100 fleet workshops nationwide and a pilot programme is currently being conducted offering third parties access to its vehicle maintenance services.

The development has long been rumoured to be taking place and has now been publicly acknowledged by Royal Mail as part of its “focus on growth”, as it seeks ways to “generate more value from our existing assets”.

The move was briefly reported in Royal Mail’s recent financial report for the year ending March 27, 2016, in which it revealed a 1% fall in Group revenue to £9.25 billion (2015: £9.32bn) and pre-tax profits of £538 million (2015: £569m).

Commenting on the financial results, Moya Greene, chief executive officer at Royal Mail, said: “Our UK parcel revenue and volumes grew by 1% and 3%, respectively.

“Our addressed letter volumes declined by 3%; total letter revenue by 2%.

“We are introducing new and improved products and services and responding quickly to changing customer needs.”

It is understood that Royal Mail is trialling third-party vehicle fleet servicing at six locations including at workshops in Leeds, Derby and north London.

Maximising existing assets is viewed by the letters and parcels carrier as part of its “focus on growth” and by offering vehicle SMR externally the move has echoes of other major end-user fleet operators such as BT and Carillion.

Both those companies now offer a range of fleet-related services to third parties capitalising on the UK vehicle SMR market, which is estimated by OC&C Strategy Consultants to be worth around £3.4bn a year.

BT established its third party business in 2002 and it has now expanded to the extent that BT Fleet is the specialist fleet management arm of the BT Group.

It manages more than 78,000 vehicles operated by a wide range of fleets, including the AA, G4S, National Grid, Network Rail, the Post Office and Thames Water as well as the telecommunication giant’s own vehicles.

Its preferred garage network, of which it owns more than 65, is now 500-strong.

Meanwhile, Carillion Fleet Management bills itself as “one of the largest fleet service providers in the UK” currently managing more than 10,000 vehicles.

The Royal Mail Group operates the biggest fleet in the country, according to the Fleet News Fleet200, with some 46,300 vehicles, including 2,000 cars, 36,000 vans and 8,300 trucks.  

A Royal Mail spokesman declined to answer any questions from Fleet News on its plans for delivering SMR solutions to third parties, saying that the pilot was “still in its early stages”, with information being “commercially sensitive”.

However, it would make sense for the company to follow in the footsteps of the likes of BT Fleet and utilise its network of workshops, and lessons learned from the management of its own fleet, with other end-user fleets.

For example, Royal Mail scooped the cost saving initiative of the year award for its World Class Mail initiative at last year’s Fleet News Awards.

Open and honest communications with garages and workshops is critical to ensure agreement on how long SMR work will take to complete.

Royal Mail utilises a methodology called ‘mean time to repair’, which records when a vehicle leaves the delivery office for repair and when it returns.

This has helped identify variation in turnaround times at different workshops.

The World Class Mail initiative has now been rolled out to the rest of the fleet and has meant that known problems are addressed before they cause the vehicle to fail.

It has also been a key reason why Royal Mail was able to increase its van fleet operating cycle from four years to seven years-plus, without any major impact on vehicle and parts failures.

“These measures have helped us to maintain our pre-eminent position in UK letters and parcels,” said Greene.



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