The Royal Mail has lost a contract worth #8 million a year to deliver goods for online trader Amazon, it has been announced.
The contract is the latest in a number of important deals the postal group has lost in the past year as it faces increased competition from private delivery firms.
The announcement of the loss of a contract to deliver second class post for Amazon came ahead of crucial talks aimed at averting a national strike by postal workers in a dispute over pay and modernisation.
Officials from the Royal Mail and the Communication Workers Union will meet at the offices of the conciliation service Acas tomorrow, although hopes of heading off a strike are not high.
Union leaders are due to meet on Thursday to review any progress in the talks and are expected to call the first national walkout in over a decade.
The Royal Mail said in a statement that Amazon, one of the UK’s biggest online retailers, has decided it will remove its second class mailings. First class deliveries will continue to be made by the Royal Mail.
A Royal Mail spokesman said: "We’re very proud to work with Amazon and the loss of such a significant piece of their business demonstrates very clearly that Royal Mail’s higher costs, directly caused by our failure to fully modernise our operations, are costing us business.
"It’s vital that we urgently change and modernise if we are to be able to compete against more efficient rivals who have already done so.
"At the same time our customers are being threatened with disruption because of strikes - strikes which are aimed at preventing exactly the modernisation that could keep our big customers on board.
"Customers like Amazon are critical to us, and to our competitors. They represent an important area of growth in a market which is otherwise declining as fewer items of mail are sent."
The Royal Mail has lost business with the Department for Work and Pensions, Centrica, BT and several banks in the past year.
The group said it was pleased the union had accepted its invitation to meet at Acas, but a spokesman stressed there was no extra money to improve a pay offer of 2.5%, which has been rejected by workers.
The CWU has made clear it will not discuss Royal Mail’s previous offer and wanted the modernisation plans to be changed after claiming they would lead to 40,000 job losses.
Deputy general secretary Dave Ward said: "The union remains committed to negotiations. I urge Royal Mail to begin fresh talks.
"If the business is unwilling to renegotiate and change their position, we will have no alternative but to continue with plans for national strike action."
