Access Pricing and Parcels Delivery

Abstract

The market for the delivery of packages and parcels is a competitive one. Particularly in areas of high population density, fixed costs are low as are the costs of entry and exit from the market. However, a full rural network for parcels delivery, while feasible, may not be cost efficient. In some countries, the rural part of the universal service providers (USP) letter mail network is used to deliver parcels to rural areas, a situation which in effect allows a single network help meet two universal service obligations (USOs). The first of these is the provision of a universal postal (letter mail) service at a uniform (letter) tariff and the second is the provision of a universal postal (parcels) service also at a uniform (parcels) tariff. At the same time, as the postal market is liberalized, other parcels operators who do not need to meet a USO may wish to use the USP’s rural network for delivery of their parcels as well. The focus of our paper is on the access pricing issues raised by this complex interaction of two USOs using a shared rural delivery network together with the potential availability to non-USO parcels operators of the use of the USP’s rural delivery network.¹