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because it is too expensive, despite EWS insisting it is still in negotiation with the mail operator.
Page 12
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It also plans to run 2,000 fewer vehicles on the road through the use of regional hub and spoke operations.
Royal Mail stated its intention to stop using Pail for the distribution of first class mall last year, due to poor relia bility. However, talks between the two companies over the transfer of existing services have broken down, leaving the mail company with no choice but to ditch all rail plans.
Paul Bateson, Royal Mail's logistics managing director, says: "There is a marked difference between the price we believe we should be paying for rail services and what was on the table. We are disappointed that after two years of discussions with EWS, we have been unable to make any headway."
But this contrasts with the rail-freight company's understanding of the situation. An EWS spokesman says: "We have a contract with Royal Mail which goes on until September 2006. We are still talking to them about their position."
He adds: "We are shocked that the Royal Mail is taking this view. We do believe there's a good case for mail to be transported by rail and a poor case for it to be transported by road.'
The spokesman also disputes Royal Mairs claim that cost was the deciding factor, saying it is currently enjoying a 20% price reduction under the existing contract and every package that has been proposed since has been increasingly commercially attractive.
• See Comment, page 9.