Whistl End-to-End closure shows how the mail market is changing


“Ongoing changes in postal market dynamics” is the reason given for the private equity company, LDC’s reversal away from investment in Whistl’s ‘End-to-End’ mail capability in England, announced last week.

The consequence is that the nascent business is “suspended” although it appears to be inevitable that it will be closed. The ‘End-to-End’ capability is estimated to employ around 2,000 people, although many of these will be on various types of temporary contract.

The original conception behind the business was to create a vehicle, 60% owned by LDC and 40% by PostNL in order to begin to deploy an end-to-end capability in the UK Mail market. Up until now Whistl, which was previously known as TNTPost UK, has relied on the Royal Mail for ‘last mile’ delivery. The new enterprise was an attempt to create competition in this ‘last mile’ segment. Presumably the logic was that PostNL/Whistl would deploy its expertise in Mail Operations and LDC, which is a subsidiary of Lloyds Bank, would provide the capital.

If successful the enterprise would have represented a major incursion into the traditional mail business of Royal Mail, previously the state-owned monopoly provider in the UK. It also represented one of the few attempts to create competition in ‘last mile’ mail services in Europe. Once this was the great ambition of the likes of TNT and Deutsche-Post DHL. No longer. The recent news illustrates how fast the market has changed.

The underlying reality behind the termination of Whistl’s project is the continuing shrinkage in the mail market. For example the Royal Mail Group announced a 3% year-on-year fall in addressed letter volumes over the last nine months of 2014, yet this represented an improvement on its expectations of a 4-6% fall. It should also be noted that Whistl lost an attempt to exempt its business from VAT, something that may also have affected the economics of the business.

The truth is that the mail market across the developed world is in quite sharp decline and major investment in new capability is not attractive.

It is important to emphasise that the Whistl business – which is a brand of the Dutch Post Office PostNL- is not closing. It will continue with its various other mail sortation and package activities which also include various forms of commercial logistics operations. Effectively Whistl is having to evolve a new business model which develops the company away from mail based activities and towards services based on parcels and small consignments. Just like its rivals in Royal Mail and Deutsche Post.