Royal Mail predictions: 7-day parcels, 5-day letters, GLS sold off

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With news out ahead of Royal Mail’s AGM today, it looks like many of our previous tentative Royal Mail predictions are likely to come true. Certainly they’re looking a lot more likely with every day that passes.

Royal Mail announced that parcel volumes are up 34% (177 million more parcels) and parcel revenue up 33.1% year on year. However, addressed letter volumes (ex. elections) is down 28% (1.1 billion fewer letters) with letter revenue down 21.5%.

The problem is that delivering parcels costs more and the mix shift from handling more parcels and fewer letters increased costs in the period by £85 million. On top of that, costs related to COVID-19 (elevated absence, social distancing, additional protective equipment and other costs) were £75 million in the first five months.

Even with people costs being reduced by slashing management and other savings, Royal Mail are confident that they will make a material loss this financial year 2020-21 and will not become profitable without substantial business change.

With all this in mind, Royal Mail say that they are considering three main objectives:

  1. Retain the USO (Same price to deliver across the UK)
  2. Consider demand for a seven day a week parcel service
  3. Retain a next day letters service during the business week

“These findings tell us that the best way to ensure the Universal Service continues to meet our customers’ needs is to rebalance our service model more towards the growing parcels market, particularly urgent parcels and urgent letters. We are currently exploring what a rebalanced Universal Service might look like. We remain committed to the universal, affordable “one price goes anywhere” nature of the USO, but we would like to deliver the items that customers want more often, not less. To do that we need a regulatory system fit for the future rather than the past.”
– Royal Mail

Royal Mail Predictions – What it means for you

I know more than a few online retailers who would rejoice at the thought of parcels being delivered seven days a week but there’s a kicker on the letters side with the hint that Saturday letter deliveries could be dropped. Frankly I don’t know too many people that would cry if their credit card bill was delayed until Monday if it meant their online purchases arrived on Saturdays and Sundays.

Royal Mail are also facing a deeper crisis and that’s a break up with the most likely outcome being to spin off the profitable GLS arm. Recently Czech billionaire Daniel Kretinsky, through his Vesa Equity Investment SARL business, upped his stake in Royal Mail to become their biggest shareholder (approx 13.1%). It’s thought that he could be interested in seeing GLS spun off and with his shareholding he’s got a decent influence on any such decision.

This is all pretty much going down the route we predicted back in June when we mooted a potential sale of GLS and revamped USO, so there are no real surprises. The news and hints from reading between the lines today are just an indication that things are bubbling away in the background and the only real question is how long it will take for, what looks like, the inevitable to happen.

28 Responses

  1. Nice… parcels revenue up by 33%. and what about our 100’s of claims for LOST items sent using Tracked48/24 ???!!!

    Some the our claims are now past their “we will reply within 30 working days”. 30 working days is too long – it’s 6 weeks FFS. Why does it take 6 weeks to establish and accept that parcels was lost… as shown by tracking that had paused/technical error/etc ????

    And what, am I expected to cover the loss? or expected to send some of these claims again? this system is terribly broken.

    On a positive note (sic!) they (RM) has not “lost” a single parcel in the whole month of June. Success !

  2. Royal mail 48 can take 7-8 working days sometimes but I dont have alot of mail loss which is good.

    Royal mail need to stop delivering parcels from China for more or less nothing, the volumes are huge and it’s a massive loss.

    Mail Prices are already quite high and with ‘free postage’ plus huge market place costs ontop of that , VAT in a marketplace where foriegn sellers are skipping some of those but getting VAT free market place costs as well as selling fake or low quality goods promoted by fake reviews has become a toxic mix for sellers that are doing the right thing.

  3. Seems these days your expected just to suck up ,loss, non delivery ,
    Fraud, etc as a cost of doing business

  4. I have only had one claim in the past year, a large letter to the USA, and the RM paid up immediately (within a few days) on a non-tracked service. Cannot say fairer than that. But in the UK I am increasingly finding people do not know where they live, or what the address should actually be, so I check each one…..which can be time consuming. But i have had wrong postcodes given to me, wrong counties (not that counties are necessary anymore), made up town names (people want to elevate an area they live in and not use the actual town name), and no one likes the word Flat…….why not, you live in a flat. Some of this may well explain the losses mentioned, also parcels left in good faith in blocks of flats and people lifting them…..not all are good neighbours. But on balance when you look at the volumes, the % loss / missing parcels is very very small.

  5. after this feedback
    “This item and seller are exemplary. The courier – Hermes were appalling.”

    were glad we kept our RM contract

  6. When i saw 7 days i immediately thought that was their new 2nd class delivery estimate, but then i realised that it couldn’t be as up to 10 days should be the figure.
    Yes i know most get there on time, but out levels of late deliveries this year has been horrendous. I don’t mean a day or two late… I mean 7 to 12 days late, even 1st class.
    Most buyers are happy to wait an extra few days…. but over 7 working days? No chance, it is refund or resend.
    RM just aren’t interested in our missing items. Every single parcel has our return address on the ppi label and on the back of the parcel, yet out missing parcel returns rate is just a trickle. Now maybe there are alot of fraudulant cases ( i have to agree here), but that still leaves alot of lost items. We send out several thousand items each month and it is a complete nightmare with a daily list of where is my item enquires. In the summer we were spending around 2 to 3 hours a day just replying to buyers and organising resends etc for missing / late items.
    Over all it is a sad reflection that RM are simply still stuck in the past, several years behind others and all they offer is excuses and price hikes. The pandemic was unexpected, but RMs issues with being stuck ina letters world, goes back many years.
    If it weren’t for the unversal service etc, they would be hung out to dry by the business world.

  7. the “record” here’s 21 calendar days for RM24 large letter !! Is this 1980’s once again? the whole idea of “delivery confirmation” is a big joke anyway. quite recently the RM tracking website shown the GPS location – what happened there it’s no longer displayed…?

  8. “Frankly I don’t know too many people that would cry if their credit card bill was delayed until Monday if it meant their online purchases arrived on Saturdays and Sundays.”
    YEAH who actually gets a credit card paper statement in 2020.
    It does effect the thousands of ebay sellers who need large letter as it is about the only affordable option.

    Your going to have to change a lot of working practices at RMG to get a 7 day service and I would think that is along way off.

  9. Royal Mail’s new price leaflet for Sept 1st has tons of errors. Here is one example

    250g Small parcel Tracked and signed to Europe is £11.55 according to RM online price calculator but the new leaflet says it’s £9.80

    Try calling them RM and the phone is constantly engaged.

    Does anyone know where I can find the correct pricing so I can update my website?

  10. Wow they have time to sit and calculate the numbers yet somehow cant employ people that read or do the job properly.

    A parcel sent tracked for France saying delivered but in Los Angeles.
    Parcels in the Uk taking anywhere from 8 to 17 days to arrive or not arriving at all.
    Tracking says delivered but nothing more. So customer asks us where was it left as if we were watching him at their house.
    Custoemr service just rolling out the usual spiel of Covid 19 and the oh he must have run out of cards to leave.

    We have parcels showing delivered then customer service tell us the GPS shows it was at the customers house when scanned, so we send another and the customer then rings us 4 days later to say the postman has brought two parcels now. So was the scanner defective on the first scan or was the satellite broken the first time or was the customer service lying to me. You can guess.

    then we recently lost our prime badge due to late shipping and we showed all parcels we collected every day at 3pm by our postman but were not getting ascan until the following day or sometimes 2 days at Sheffield just 63 miles up the road I could walk it there quicker.

    But you get no refund of the payments you make when their system fails.

  11. I hope eBay, Amazon and other online markets quickly remove Saturdays as a delivery day for letters/large letters and small packets. I can see many sellers receiving late delivery defects if the delivery periods are not adjusted on time. It could take a while for customers to realise that RM no longer delivers letter packets on a Saturday which could still result in negative comments from customers expecting deliveries.

  12. Sept 1st 2020 postal hikes for 500g SMALL PARCEL according to the new online PDF

    EUROPE COSTS MORE FOR TRACKED

    11.55 Tracked & Signed

    13.86 Tracked

    USA COSTS MORE FOR SIGNED

    £18.68 Tracked & Signed

    £16.68 Tracked

    STANDARD NOW ONLY £1.50 LESS THAN TRACKED AND £3.50 LESS THAN TRACKED & SIGNED

    £15.18 Standard

    RM are doing a grand job of destroying overseas trade.

  13. All tracked 24 and 48 have to be scanned at every office they go into including the local delivery office. As well as at the door step. The backlog that has been seen in some areas was massive i dont mean a few hundred parcels i mean thousands possibly 10s of thousands.one place i visited had 10 artic trailers of mail waiting to be sorted on a daily bases and they couldnt get more staff into the building to sort due to social distancing in the building.
    I believe but am not sure but price increases to foreign countrys are being driven by what the foreign countrys charge royal mail.i had a letter/small packet from the USA postage was $14.50 it had one promo game card in it.
    The uk regulator needs to make sure pricing is fair across the board,but i hear royal mail isnt allowed to under cut other delivery companys prices unless they was already cheaper. And if companys like TNT,secure mail have mail they cant deliver it gets delivered by royal mail and they get paid by the other companies less than it cost to deliver

  14. I haven’t come across this anywhere and can’t see anyone discussing it but does everyone know that Royal Mail are increasing the price of their CRL products from 5th October? https://www.royalmail.com/prices2020

    80p a large letter now. I’m kind of dumbfounded by this price increase as Royal Mail are busier than ever with more revenue coming in, so the solution is to… increase prices…..

  15. I’m a postman, at the moment there are so many problems with the company it’s hard to know where to start. I love my job, when it works effectively its great, such a great job but currently it’s just failing!!
    Most of our revenue is through letters, so even through lockdown the increase in parcels didn’t help the reduction in letters. We didn’t have enough staff to process and deliver the increase in parcels.
    We can’t compete with courier companies, we aren’t a courier company- we are postmen/women walking with letters and trying to clear parcels at the same time. It’s such a different job when delivering parcels only in a van.
    Our delivery office is short by 18 full time positions however the next round of full-time positions that will become available, the company are only allowing us to employ (move from pt to ft) 4!
    We feel desperate, letters and parcels being left in whilst tracked items are prioritised. The postmen/women, we feel upset leaving letters in, sometimes for days on end- hospital letters etc!! It’s so bad.
    I don’t think the swing towards part time staff helps, they are constantly moved around rounds wise and so they don’t effectively get to know rounds well enough and so mistakes are made.
    Our PDA handheld scanners are temperamental, there are not enough to go around each postman, batteries running out… It goes on.
    Outdated delivery offices, outdated equipment… So many things wrong on the ground.
    There’s no point building a brand new shiny parcel hub if your postman is in a knackered van, no battery and because of staff shortages chunks of mail left in the office everyday…. This was happening before covid, covid has just added to the problems.

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