Why is NR investing in Doddle

Discussion in 'UK Railway Discussion' started by mrmartin, 19 Aug 2015.

  1. mrmartin

    mrmartin Member

    Messages:
    559
    Joined:
    17 Dec 2012
    Network rail invested nearly £30m in Doddle, which is a 'joint venture' for collecting parcels & sending them.

    I only found this out as I've used the service a fair bit and found the shops and service badly ran and seemingly very overstaffed and the obviously had a lot of money pumped into them.

    I was surprised to find out it was NR.

    Are they allowed to do this? Since when did NR become some sort of Dragon's Den investor in startups?

    It seems to me they should not be doing this and instead providing the retail area for others to do it, probably better since they don't have a government funded enterprise payrolling it.

    There's a few reasons in my mind for this - firstly, NR don't really have any track record or expertise in investing in startups and it's not in their remit.

    Secondly, I think there's real conflict of interest here. If amazon/whatever came along and wanted to offer a similar parcel collection service, would they allow it or start worrying about the damage it could do to their own competing service, which frankly isn't very good, even if passengers and station users would get more from it?

    Finally, isn't this contravening EU state aid rules?
     
  2. Registered users do not see these banners - join or log in today!

    Rail Forums

     
  3. najaB

    najaB Veteran Member

    Messages:
    20,979
    Joined:
    28 Aug 2011
    Location:
    Scotland
    I could be wrong, but I don't believe there is any rule against purely commercial public/private partnerships. State aid rules come into play if the state money is provided on non-commercial terms, e.g. a grant that doesn't need to be paid back, or a loan at significantly lower than market rates.
     
  4. Clip

    Clip On Moderation

    Messages:
    10,585
    Joined:
    28 Jun 2010
    Why shouldn't they invest in it though and capture that all important commuter market and reap even more of the rewards from it? Already there are institutions that are not allowing people to have parcels delivered to their workplace so picking up from a station is the logical step.


    Currently they rent out units and take a slice of the profit from that - this way they can take even more profit from the venture.

    They are already a landlord over many properties and not just ones inside a station and as long as the money gets invested back into the railway then surely that's a good thing? They've been going a couple of years now so the perfect time to get in I would say.
     
  5. crehld

    crehld Established Member Associate Staff Senior Fares Advisor

    Messages:
    1,994
    Joined:
    1 Nov 2014
    Location:
    Norfolk
    Not quite. The nature of the aid (loans, grants, non-commercial support) is irrelevant. State aid rules are notoriously complex and far too detailed to outline in a RailUK forums post. However at a minimum, four basic criteria need to be met for state aid rules to kick in:

    1. Is 'the state' (i.e. any public or private body controlled by the government) providing the resources (note 'resources' can be non-pecuniary in nature, but does include all )?
    2. Are the resources offered to an organization (public, private or voluntary) undertaking economic activity (note 'economic activity' does not equate to profit making - it asks if you are providing goods or services which will be available on the market)?
    3. Does the aid offered have the potential distort competition?
    4. Does the aid offered affect the balance of trade (positively or negatively) between EU member states?

    If the answer to one of these questions is "no" then we have no need to worry. If, however, all of these questions are answered "yes", we then analyse the situation in relation to EU state aid regulations.

    Note that state aid regulations do not ban or prevent state aid itself. Firstly any beneficiary of state aid may receive up to the so-called 'de minimis threshold' over a three year period (the exact figure escapes me) without the rules being broken. Each member state has also negotiated a state aid agreement which allows state intervention and reflects the specificity of their economy and public investment requirements (remember the EU is a political system of bargaining and compromise, not some overload based in Brussels telling us what to do).

    If the aid exceeds the de minimis threshold and falls outside of the scheme agreed with the EU, then approval needs to be sought from the European Commission, who will analyse the likely impact of the aid on the revealing market to ensure the principles of the Single European Market are upheld.
     
    Last edited: 19 Aug 2015
  6. najaB

    najaB Veteran Member

    Messages:
    20,979
    Joined:
    28 Aug 2011
    Location:
    Scotland
    Thanks. I expected that I was probably wrong in the details, kind of you to say 'Not quite' rather than 'complete tosh'. :)

    However, it does confirm that NR investing in Doodle isn't a breach of the rules since the answer to question 4 is "No".
     
    Last edited: 19 Aug 2015
  7. crehld

    crehld Established Member Associate Staff Senior Fares Advisor

    Messages:
    1,994
    Joined:
    1 Nov 2014
    Location:
    Norfolk
    In relation to EU state aid rules here are some of the relevant questions which need to be answered in order to determine whether the investment is legitimate or not:

    - Is Network Rail a public or private body controlled by the state (as defined under the state aid regulations)?
    - Is Network Rail's investment drawn from state resources (as defined under the state aid regulations)?
    - What is the nature of this 'joint venture'? Is the £30m Network Rail have spent an investment in the business (Doddle) itself, or have they merely invested in the infrastructure (i.e. creating shops on station concourses) which could be rented out to anyone (so not affecting competition)?
    - Assuming the investment is subject to state aid regulations, does it fall within the scheme agreed by the EU and the UK government?
    - If not, has the investment been approved by the European Commission?
     
    Last edited: 19 Aug 2015
  8. mrmartin

    mrmartin Member

    Messages:
    559
    Joined:
    17 Dec 2012
    I'm not at all saying it's a bad idea, far from it. I'm saying that I don't think NR should be speculating with taxpayers money on it.

    Should NR start investing in any random upmarket coffee shop too since they could possibly get more money for the taxpayer, but more likely lose it all? NR isn't a private equity firm.
     
  9. crehld

    crehld Established Member Associate Staff Senior Fares Advisor

    Messages:
    1,994
    Joined:
    1 Nov 2014
    Location:
    Norfolk
    I'm not so sure. The key test here is whether the opportunity Doddle were given was open to similar companies across the EU.
    --- old post above --- --- new post below ---
    I agree that I'd be uneasy in Network Rail investing in a start up business, but I'm not entirely convinced that's what they're doing, hence the questions I posed.

    Perhaps they're not investing taxpayers' money (or 'state resources' in the state aid parlance)? Perhaps they're not actually investing in the company, hence why I ask if they're only building the shops which would be available to anyone to rent out.

    Perhaps Network Rail have made an investment in the infrastructure at key stations costing £30m, which over the course of 5 years might generate £60m in rent revenue? In which case I'd be happy they've found a way to generate some extra income to supplement (and hopefully reduce) their subsidy and the money I pay in fares.
     
  10. Clip

    Clip On Moderation

    Messages:
    10,585
    Joined:
    28 Jun 2010
    They could've done if they(or Railtrack) had seen the rise in popularity of coffee shops when the boom hit? To start now and get rid of the well established and very popular brand names that now occupy station premises would be foolish given the costs for the start up to happen from sourcing the beans to everything else would be horrendous. To simply invest in Whitbread or even starbucks I doubt would be allowed.

    However, with the model that Doddle works to in simply being a place to facilitate only pick ups and drop offs from their partners the costs are not so large as they already have the space and only really need to employ people and a bit of barcode tech and they are up and running with the profits possibly far larger to the outlay.

    Lets face it - with shops trialling click and collect at tube stations now this seems a no brainer.
     
  11. nuts & bolts

    nuts & bolts Member

    Messages:
    244
    Joined:
    24 Jan 2015
    Location:
    B & H
    Is "Red Star" (parcels) making a comeback?
     
  12. ScotrailINV

    ScotrailINV Member

    Messages:
    48
    Joined:
    2 Jan 2015
    Amazon already offer their Locker pick-up service from a few railway stations:

    http://www.amazon.co.uk/gp/help/customer/display.html?nodeId=200804740

    You can also select Doddle as a delivery service for the majority of their locations when ordering from Amazon, which has been available since September 2014:

    https://www.amazon.co.uk/gp/help/customer/display.html/?i&nodeId=201594730
     
    Last edited: 19 Aug 2015
  13. HH

    HH Established Member

    Messages:
    4,161
    Joined:
    31 Jul 2009
    Location:
    Essex
    The question isn't so much whether NR can do it (trust me, the lawyers run NR, so you can bet your bottom dollar that they can), but whether they should.
     
  14. Bletchleyite

    Bletchleyite Veteran Member

    Messages:
    46,860
    Joined:
    20 Oct 2014
    Location:
    Up and down the south WCML (mostly)
    It's notable that Greater Anglia have actually done this to some extent by importing the Dutch "Kiosk" concept and kicking out some long-serving independents.
     
  15. route:oxford

    route:oxford Established Member

    Messages:
    4,855
    Joined:
    1 Nov 2008
    It's a benefit to commuters - so why not?

    I used to use "Collect+" (now discontinued by Amazon for deliveries) but switched to Amazon Locker as soon as the facility opened near me in Oxford.

    It has the advantage of instant service, Amazon parcels don't go "missing" in the store, and (some contributors will find this offensive) I don't have to stand in a queue with C2DE individuals as they buy their cigarettes and alcohol in sub-prime retail outlets.
     
  16. Bletchleyite

    Bletchleyite Veteran Member

    Messages:
    46,860
    Joined:
    20 Oct 2014
    Location:
    Up and down the south WCML (mostly)
    Yes, Doddle does seem to be rather more professionally operated than many (not all) of the local shops in the Collect+ network.
     
  17. asylumxl

    asylumxl Established Member

    Messages:
    4,260
    Joined:
    12 Feb 2009
    Location:
    Hiding in your shadow
    God damn all those C2 skilled manual labourers, buying alcohol and cigarettes while you wish to collect your package! Absolute oiks!

    Actually, the alcohol would probably explain some of the messes coming out of Bombardier's Derby factory.
     
  18. DaleCooper

    DaleCooper Established Member

    Messages:
    3,377
    Joined:
    2 Mar 2015
    Location:
    No.664 - Next door to the Beast
    I expect contributors to this forum would either despise or pity you rather than be offended by such a puerile and snobbish remark.
     
  19. Clip

    Clip On Moderation

    Messages:
    10,585
    Joined:
    28 Jun 2010
    Well at least thats one last tramp I dont have to wait behind because theyre too cheap to use royal mail whilst Im waiting for me booze and tabs.
     
  20. Mojo

    Mojo Forum Staff Staff Member Administrator

    Messages:
    17,209
    Joined:
    7 Aug 2005
    Location:
    0035
    Whenever I walk past Doddle outlets there are no customers in them and some very bored looking staff hanging around. Does anyone use this servuce?
     
  21. radamfi

    radamfi Established Member

    Messages:
    8,767
    Joined:
    29 Oct 2009
    I've used Doddle in the past because I used to work somewhere which didn't like having parcels delivered. But I can't see how it will be profitable given you have to pay staff to stand there most of the time doing not much. Surely automated lockers make a lot more sense?
     
  22. Stats

    Stats Member

    Messages:
    943
    Joined:
    27 Sep 2009
    They are not an investor in the sense you are talking about. Doddle started out as a Network Rail initative to utilise redundant space in stations, generating income that could be reinvested in the railway. There's nothing wrong with that in my view.
     
  23. Kristofferson

    Kristofferson Member

    Messages:
    1,132
    Joined:
    23 Nov 2012
    To me, it's a post office for the modern age. Tracked parcels, reasonable prices and - here's the kicker - they're actually open at a time people are able to use them!

    Edit: But yes, I'd prefer automated lockers or the reinstatement of Collect+ by Amazon. Despite the opinions of some about the "quality" of Collect+ stores, even they would agree that queuing in the local Spar is preferable to going to a depot on a Saturday.
     
    Last edited: 20 Aug 2015
  24. Bletchleyite

    Bletchleyite Veteran Member

    Messages:
    46,860
    Joined:
    20 Oct 2014
    Location:
    Up and down the south WCML (mostly)
    I've used it (my company's London office is near enough opposite the Cannon St branch so it's very convenient).

    Yes, they do seem quiet. I think the Amazon contract will help, though.
     
  25. route:oxford

    route:oxford Established Member

    Messages:
    4,855
    Joined:
    1 Nov 2008
    Try ordering something on Saturday afternoon with Royal Mail delivery and have it in your hands or ready for collection on a Sunday Morning...

    I pay for a premium service that complements my life rather than a costly heritage delivery system designed for the days of housekeepers or housewives.
     
  26. najaB

    najaB Veteran Member

    Messages:
    20,979
    Joined:
    28 Aug 2011
    Location:
    Scotland
    I'm pretty sure I remember Royal Mail saying they are going to (re)introduce Sunday delivery where it makes economic sense to do so. Inner London to start with and then expanding to other areas.

    Edit: Yup, I wasn't making it up (for a change): Royal Mail Sunday services introduced from September 2014. Okay, so it's 12pm for collection rather than Sunday morning but what's an hour between friends. ;)
     
    Last edited: 20 Aug 2015
  27. Bletchleyite

    Bletchleyite Veteran Member

    Messages:
    46,860
    Joined:
    20 Oct 2014
    Location:
    Up and down the south WCML (mostly)
    Must admit I prefer local collection as I don't need to wait in. (Need to get round to getting one of those boxes for parcel deliveries).
     
  28. asylumxl

    asylumxl Established Member

    Messages:
    4,260
    Joined:
    12 Feb 2009
    Location:
    Hiding in your shadow
    Kind of useless if the service is limited to a small selection of areas.
     
  29. najaB

    najaB Veteran Member

    Messages:
    20,979
    Joined:
    28 Aug 2011
    Location:
    Scotland
    Sunday collection isn't, that's pretty widely available (have a look at the .pdf attached on the link above). It's only Sunday delivery that's limited to inside the M25.
     
  30. Clip

    Clip On Moderation

    Messages:
    10,585
    Joined:
    28 Jun 2010
    Yes but mainly at times they are passing through so for commuters thatll be morning/evening time.

    The lockers are probably where its going but I do believe you can print off address labels at Doddle outlets too which saves you using works printer or if you haven't got one at home.

    I just break into the delivery office after I have queued up for me beer and tabs. Then again Ive never felt much desire to order stuff on a Saturday - except for when trainers get released at a minute past midnight but then I don't expect them to be delivered till Monday/Tuesday. You must lead a busy and hectic life
     
  31. Agent_c

    Agent_c Member

    Messages:
    933
    Joined:
    22 Jan 2015
    I used it when it was free, and I'll consider using it again at Christmas. Depends if the cost of pickup outweighs the cost of finding the delivery place.
     

Share This Page