TNT Mail has been using Express Dairies' residential delivery service since last year to distribute small parcels, magazines and catalogues. However, mounting losses have forced Express Dairies to scrap the service as of next month.
"It's clear we will never be in a position to match Royal Mail's delivery scale, but we will be its prime challenger," said David Higham, development director for TNT Mail. "Where there's a business case to put forward, we will be there. Our deal with Express Dairies was mainly concerned with heavier items and this is only a small part of the market."
Higham said TNT Mail will be looking at offering a service for heavier-weighted items and letters and could seek to develop this through a partnership or by acquisition. It has more than 30 clients at present, including Lloyds TSB and npower.
But industry experts have expressed doubts over whether TNT Mail has the capabilities to deliver a robust service.
David Laybourne, technical director at DPS Direct Mail, said: "Express Dairies has struggled to make money, despite delivering around six million items in the past year. The infrastructure costs associated with establishing an end-to-end service are enormous."
Experts say TNT's plans will be further hampered by Deutsche Post's recent takeover of UK logistics company Exel.
"Volume is everything for Royal Mail competitors such as TNT and UK Mail," Laybourne said. "Deutsche Post's takeover, although mainly concerned with the logistics rather than the mail market, means the icing is now being spread that little bit thinner." - News Analysis, page 20.
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