Should Royal Mail cut post deliveries to three a week?

Post by **TrueBlueTerrier** » 20 May 2016, 12:43

Should Royal Mail cut post deliveries to three a week? Profits slump 33% as fewer letters are sent and competition eats into parcels business

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Royal Mail has revealed a slump in profits as British households continue to send fewer letters and its parcel post revenues are eaten into by a growing number of specialist delivery firms.

Revenues fell 1 per cent to £7.6billion from £7.7billion a year earlier, as letter volumes fell by 3 per cent.

One independent postal economist told BBC Radio's Wake Up to Money that delivering mail six days a week is no longer viable for Royal Mail, and that deliveries should be cut to just three deliveries a week.

Ian Senior, said: 'The business is still viable, particularly on the parcels side.

'You have to realise that value of delivering a parcel is going up, the value of delivering a letter is going down. The great majority of letter mail is not time sensitive anymore.'

Nevertheless the firm was quick to rebuff suggestions it could go down to three days a week, instead of six.

A spokeswoman said: 'We do not agree with anyone who says that the Universal Service specification should be cut to three days a week.

'The six-day-a-week service is a key part of the Postal Services Act and we are proud to deliver it.'

Profits for the year to the end of March were £267million compared with £400million in 2015, although the company said last year's results were skewed by the profit on the sale of its Paddington depot in west London.

In contrast UK parcel volumes increased by 3 per cent, while volumes at Royal Mail's European division, GLS, also grew 10 per cent.

This helped total group revenue rise 1 per cent to £9.2billion for the year.

Its parcel business has outperformed its letter arm, in the face of increased competition from couriers like FedEx and UPS, and parcel pick-up and delivery specialists like Yodel, DPD and Collect+.

The company added: 'The UK letters market has been subject to a structural shift away from paper-based communication to electronic communication for a number of years now.

'Given this structural decline we are focused on promoting the value of mail through campaigns such as keep me posted and optimising mail handling within our operations to accommodate a changing letters mix and increase efficiency.'

The 500-year-old company was privatised back in 2013 and listed on the London Stock Exchange.

Its shares this session are down 6 per cent, or 28.6p at 479.4p.

Chief executive Moya Greene remained upbeat about the company's prospects. Under Greene, the company has embarked on an ambitious cost-cutting drive and this morning confirmed that it reduced its headcount by 3,500 over the year.

She said: 'We have delivered a resilient performance in challenging markets.'

She added: 'We are introducing new and improved products and services and responding quickly to changing customer needs.

'These measures, alongside our emphasis on customer focus and delivering a value for money service, have helped us to maintain our pre-eminent position in UK letters and parcels and driven growth.'

Charles Huggins, analyst at Hargreaves Lansdown, added: ‘ Against a challenging backdrop, Royal Mail’s performance has been solid, if uninspiring. UK parcels was supposed to be the growth engine for Royal Mail, with the UK letters business in decline, but conditions look set to remain challenging.

'The demise of rival City Link in December 2014 has been followed by a host of announcements from other parcel operators warning of pricing pressures.

'Meanwhile Amazon has become a competitor as well as a customer, with the launch of its own delivery service, Amazon Logistics.

'Shareholders will welcome a healthy 5 per cent rise in the dividend, which is underpinned by the group’s prodigious cash flows and a substantial London property portfolio, but revenue growth will probably be hard to come by until market conditions improve.’

Pidleypoo · Post by **Pidleypoo** » 20 May 2016, 14:29

The fact is they are trying to deliver on Sundays as well. so for the second time in two days we get this ill-informed idiot who know squat about the day to day running of the place saying we can fit what takes 6 days in to 2 days. All well and good but we don't fit 6 days work in with what we have now unless people do lots and lots of overtime.

borgpicard · Post by **borgpicard** » 20 May 2016, 15:28

fewer letters are sent ????, Where, ?, Not in our D.O, if anything they are up, and the figures proove it .

Post by **rambo1** » 20 May 2016, 17:52

There must be some offices somewhere with next to no mail to bring the average down coz every postie I know says letters are categorically not dropping.

houseoflords · Post by **houseoflords** » 20 May 2016, 18:19

It will happen, more cost cutting on the way

Sonny15 · Post by **Sonny15** » 21 May 2016, 20:37

I've worked as a postie for over 12 years. I am delivering more letters now than I ever have! There may be less stamped letters but business mail is massive! Royal Mail put these figures out but I'd love to see the people at the top come work with us for a week and say mail is dropping! Virgin alone gives us more mail than I had 12 years ago. Just a cover up to justify not giving people full time jobs.

datasaint · Post by **datasaint** » 21 May 2016, 21:06

houseoflords wrote:It will happen, more cost cutting on the way

God forbid RM ever makes a loss one year there'd be medlum.

cosi1259 · Post by **cosi1259** » 22 May 2016, 13:00

as a lowly temp that, some months barely manages to get 16 hours , i am thinking that if deliveries go down to 3 a week why would anyone want to post 1st class, if posted on the wrong day could take up to 3 days to arrive. surely that would have a knock on effect leaving any competion more room to muscle in . then on top of that are you not leaving the door open for RM to start cutting hours . unless i am missing something it just seems they want to shoot themself in the foot then break the other one , hardly a well thought out plan

datasaint · Post by **datasaint** » 22 May 2016, 21:03

cosi1259 wrote:surely that would have a knock on effect leaving any competion more room to muscle in

No the competition isn't there because delivering letters isn't a viable business long term. That's why Whistl (TNT post) stopped.

Doing 3 day a week would be drastic, and won't happen for a long while yet, but it would ensure RM can keep the cost of the service relatively low. You'll probably see a 5 day a week USO first, like Holland Tues-Sat.

Post by **fb1969** » 23 May 2016, 06:07

I wouldn't think it would be a 3 day week for us, I would expect it to be something along the lines of:

Take half of a round on Monday/Wednesday/Friday and the other half Tuesday/Thursday/Saturday. That way they could either have shorter hours every day and keep the workforce around the same level. Or increase the size of each round to about double what it currently is and reduce the workforce.