LTB 031/13 - Royal Mail Plans To Change Its Parcels Range

[POSTMAN]

CWU.org
22 January 2013
LTB 031/13 - Royal Mail Plans To Change Its Parcels Range



No. 031/2013

Ref: 031
Date: 22nd January 2013






To: Postal Branches
Divisional Representatives
Regional Organisers
Parcelforce Representatives
Area Processing Representatives
Area Distribution Representatives
Area Delivery Representatives





Dear Colleague



Royal Mail Proposals To Change Its Parcels Range



In November 2012 Royal Mail issued a brief to employees regarding their parcel strategy, the financial position, modernisation and customer strategy (Annex A). The headlines of the strategy were described in the brief as follows:



Ø Change our business to become more of a parcels business.
Ø Successfully manage the decline in letters.
Ø Become a more customer focused company.
Ø Be a successful and profitable business, including obtaining external capital.



Early in December Royal Mail released a press statement (Annex B) announcing that it was beginning a consultative process on changes to its parcels range. The statement contained the following points:



Ø Currently, there are up to 15 weight bands for parcels (I believe it is worth noting that these items were previously referred to as packets). The proposal is to reduce the amount of bands from 15 to 7 from April 2013



Ø The proposal means Royal Mail's range of parcel products should be easier for consumers to understand and improve choice. They will have the ability for the first time to send parcels between 1kg and 20kg using Royal Mail's 2nd class service, with the added option to receive a signature on delivery



Ø The proposal also includes, introducing two broad parcel categories - small parcels and medium parcels. This will bring Royal Mail in line with other major postal operators, for example, in Germany, France and Italy



Ø The proposals should be easier for consumers to understand and improve choice. They will have the ability for the first time to send parcels between 1kg and 20kg using Royal Mail's 2nd class service, with the added option to receive a signature on delivery.


Ø Currently, for items weighing up to 20kg, signature on delivery is only available through 1st class. We believe the increase in the 2nd class weight limit to 20kg is a very meaningful addition to customer choice. As a result of this improvement, our standard parcels product will be withdrawn.


Ø Royal Mail intends to change its compensation arrangements to bring them more in line with other postal companies. It is the intention to increase the maximum compensation payable for loss or damage of recorded signed for items from £46 to £50. These are items for which a signature is collected on delivery and a proof of posting receipt is provided.


Ø Alongside this, it is the intention to reduce compensation for loss or damage of items sent using our untracked 1st and 2nd Class stamped mail and parcels from £46 to £20. Many countries do not offer any compensation for loss or damage of untracked items, including Germany, the Netherlands and the United States. Royal Mail will continue to pay compensation for delayed items and the limit will be unchanged. The changes will ensure that Royal Mail provides proportionate and reasonable compensation based on the service used and postage paid.



Royal Mail have committed to a high level presentation at the Shadow Ops Executive with all of the National Officers in attendance in respect of their parcels (previously known as packets) in Royal Mail strategy.



Further to the attached WTLL brief, the press release, questions raised at CWU briefings, managerial mixed messages and enquiries that have been received in the department, we have raised this matter with Parcelforce in an effort to understand what the proposal may mean to them and summarised below are the current points established in these ongoing talks.



Parcelforce's take on the issue is that RM has commenced a consultation with customers and consumer bodies on the proposals described above in relation to USO products and services. In keeping with RM's press release they describe the proposal as a commercially driven strategy to ensuring that profitable revenue is maximised.



They have also confirmed their understanding that the 'Standard Product' transferred to RM when Parcelforce restructured back in 2002 will be withdrawn and replaced with simplified pricing ranges and the introduction of a split based on size for parcels in the same way there is for letters.



At present the weight limit for 2nd class is 1kg with no maximum for first class. The proposal is to extend the weight limit for 2nd class to 20kg and introducing maximum size limits based on what RM can comfortably handle through the core parcel network. Under the proposals, items larger than medium parcels will no longer be accepted through the Royal Mail core network. Therefore customers wishing to post larger items will have to exercise a choice of using Parcelforce or another provider.



We have also sought greater detail on the potential forecasted impacts from a Parcelforce perspective as they try to guess what actions will be taken by consumers at the POL counter for example. As a consequence Parcelforce have confirmed that they are planning on the following assumptions;



Likely effects:


Migration to PFW



Ø Oversized for RM network 2.7m items (2%)
Ø Large parcel premium charge 3.1m items (2%)



Lost to competition (e.g. resellers, other carriers)



Ø 9.6m items (7%)



Retained by RM



Ø 125.6m (89%)


The vast majority of current RM packets and parcels in POL are to be retained in the RM network. This reduction in the carried volumes should very quickly be replaced by natural growth in the market. Current projections are that online retail sales will account for 12% of the retail market by 2016 and even this projection could be at the lower end of the scale.



We raised our concern that the proposals should not result in the introduction of a non-profitable pricing stream in Parcelforce, and the business have confirmed that any extra parcels migrating to the PFW network will attract the usual commercial rates and service offering. It is expected that the vast majority of parcels will migrate to the Express48 product. These moves will potentially more than double the amount of domestic work carried via PFW from POL.



Parcelforce have confirmed that they are now analysing what this means for PFW operations as the number of POL collections and the volume from those collections would have to increase if the assumptions were to materialise. Equally there could be an impact on the hub network (potentially a larger day shift) and on RM Network services.



Parcelforce have confirmed that the changes are due to take place (assuming a positive consultation period) in April 2013 and the department has requested further meetings to ensure that any operational change is negotiated and agreed. We have also written to both Parcelforce and Royal Mail seeking assurances that this initiative will not have any impact on current staffing levels in Royal Mail letters.



Clearly given the response from Parcelforce there is a sense of reassurance that 89% of current parcel/packet traffic will be retained within the RM operation and that the growth trends suggest that the other 11% will be easily replaced. This information should be useful to the people that have raised concern that there are rumours circulating that RM are transferring all their parcel/packet traffic to Parcelforce and put the proposal into a more accurate perspective.



Any enquiries in relation to this LTB should be addressed to Terry Pullinger, Assistant Secretary, e-mail: dwyatt@cwu.org or lwright@cwu.org quoting reference number: 031



Yours sincerely









Terry Pullinger

Assistant Secretary


More info +

[dvbuk55]

I believe them implicitly.

[5plusbonusball]

Looks ok on paper, have you tested it?? like you've tested the new duties??

[adb2aber]

Likely effects:

Migration to PFW

Ø Oversized for RM network 2.7m items (2%)
Ø Large parcel premium charge 3.1m items (2%)

Lost to competition (e.g. resellers, other carriers)

Ø 9.6m items (7%)

So RMs game plan for the next year is to lose 9.6 million items to other carriers? I guess we'll be hearing about mail volumes falling for another few years yet.

[db]

Likely effects:

Migration to PFW

Ø Oversized for RM network 2.7m items (2%)
Ø Large parcel premium charge 3.1m items (2%)

Lost to competition (e.g. resellers, other carriers)

Ø 9.6m items (7%)

So RMs game plan for the next year is to lose 9.6 million items to other carriers? I guess we'll be hearing about mail volumes falling for another few years yet.

To PFW "parcel force worldwide"
Not really loosing it is it!!

[adb2aber]

Lost to competition (e.g. resellers, other carriers)

Ø 9.6m items (7%)