For brother woofwoof when he comes online again:
CWU RESEARCH BRIEFING DOC:
Royal Mail is one of the three main businesses operating as part of the Royal Mail Group, the others being Post Office Ltd and Parcelforce Worldwide.
Royal Mail is responsible for the collection, sorting and delivery of mail in the UK. In 2003 Royal Mail regained responsibility from Parcelforce for the collection sorting and delivery of standard parcels; Parcelforce now deals almost exclusively with the business market for parcels.
Royal Mail handles some 82 million items a day and has a statutory duty to provide a delivery service to 27 million addresses in the UK for letters and for parcels weighing up to 20kg.
Six days a week Royal Mail delivers daily to all addresses in the UK and provides a collection service from post boxes, Post Offices, businesses and organizations throughout the UK.
Basic statistics
In the 2003-2004 financial year Royal Mail handled 23.5 billion items. This was a 1.6% increase in mail volumes from the previous year and was due mainly to growth in use of bulk mail products.
Royal Mail distributes letters and parcels to 27 million addresses throughout the UK. Mail is collected from 16,000 Post Offices and 115,000 Post Boxes and distributed through 72 mail centres and 100 distribution centres.
Financial situation
Royal Mail had an external turnover of £6,589m in the 2003-2004 financial year, up £299m on the previous year, and accounting for 76% of the total external turnover of the Royal Mail Group. This increase in turnover was due mainly to the price increases for UK letters in May 2003 and to the volume increases referred to above.
Royal Mail made a £253m profit from operations in the 2003-2004 financial year, up £233m on the previous year. It is clear that the core activities carried out by Royal Mail are very profitable – during 2003/4 its profits accounted for 115% of the £220m overall profit from operations.
The turnover of Royal Mail’s international letters operation declined by 2% (12m); volumes were lower because of higher prices and electronic substitution.
The Universal Service
Royal Mail is subject to a Universal Service Obligation (USO) the key requirements of which are to:
Deliver letters and parcels up to 20kg to all addresses (bar certain limited exceptions as specified by Postcomm) at least once a day.
Collect mail at least once a day from each ‘access point’.
Access points include post boxes and post offices; post boxes should be no more that 500m away from 99% of addresses in post code areas in which there are more than 200 addresses per km2; post offices should be no further away 10km away from 95% of users.
Postage prices should be affordable and subject to a geographically uniform tariff.
Regulation of the postal market
Royal Mail is regulated by Postcomm, the independent regulator set up by government in 2000. The postal industry has undergone major changes in recent years as the regulator has eroded Royal Mail’s monopoly and opened up the market to competition from new operators.
40% of Royal Mail’s market by volume was opened to competition by Postcomm in 2003. The rest of the market was to be opened in two stages between now and 2007, however, Postcomm have recently proposed bringing this forward and fully opening the market fully, in one step, on 1st January 2006. This would mean further acceleration of deregulation in the UK ahead of the timetable set out by the European Union directive on postal services.
The opening up of Royal Mail’s market to competition has not so far had a significant effect on Royal Mail’s market share; it still handles over 99% of letters in the UK. The extent to which Royal Mail will be able to retain its position as the rest of the market is opened and operators gain access to Royal Mail’s downstream ‘pipeline’ remains to be seen.
Staffing
It is difficult to assess the number of people employed at Royal Mail as the Royal Mail Group no longer publishes a separate figure for this part of its business. However, there were 189,221 people employed at the end of the 2003-2004 financial year in the UK Mails and Parcels section of the Royal Mail Group. This sub-section of the Royal Mail Group includes Royal Mail and Parcelforce. Royal Mail makes up the vast majority (in previous years over 90%) of the section.
Current issues
Royal Mail has undergone major changes recently in a bid to improve its efficiency and its financial situation as part of a three year Renewal Plan; the introduction of single daily deliveries has been a very visible example of this.
Royal Mail has been heavily criticized in the press, by Postcomm and Postwatch, for failing to meet all 15 of its quality of service targets in the first quarter of 2004-05, its worst performance for three years. Royal Mail puts this down to the effects of operational changes it is making in deliveries, the transport network and mail centres as part of its Renewal Plan. Consequently, Royal Mail faces the prospect of fines from Postcomm and will have to pay substantial compensation to customers.
CWU Research
October 2004
RD05/02/16
Good job I initially saved it to file.