Universal postal service in danger
We have taken it for granted for years that letters will be delivered six days a week for the same price anywhere in the UK.
Monday, 24 Nov 2014 09:46 GMT
Moya Greene: the UK parcels market remains challenging
Businesses have been able to plan ahead using this simple rule. Now the universal postal service could be in crisis within a short period according to the boss of Royal Mail following the release of figures regarding its performance in the last six months.
Moya Greene, the Royal Mail’s chief executive, told the BBC yesterday that if competitors continue to eat away at their market then the six day letter service will be unsustainable. The former state industry has called for Ofcom to intervene and to consider expanding the Universal Service mandate to include competitors such as Whistl.
It is a question that will worry many printers, sign-makers, and wide-format specialists as any change in costs could hit profits”
The share price for the Royal Mail fell more than eight percent after the news of a one percent drop in profitability amid fears that the rise and rise of Amazon’s parcel delivery service and the expansion of Whistl will erode the viability of the Royal Mail in its present form.
It is a question that will worry many printers, sign-makers, and wide-format specialists as any change in costs could hit profits. Many companies use smaller couriers and the likes of TNT to deliver jobs and receive materials due to the speed and reliability. The Royal Mail still delivers the lion’s share of parcels and letters (especially in rural areas) but Moya Greene has clearly signalled a change could be afoot. Despite this, she sees plenty of positives in the figures even against a fall in share prices.
She says: “I am pleased with our overall performance. We have delivered two percent revenue growth together with margin expansion, in line with our expectations. Our tight cost control meant that UK costs were flat on an underlying basis and we are expecting a similar performance for the full year. Looking further ahead, we are targeting a flat or better underlying UKPIL cost performance in 2015-16.
“The UK parcels market remains challenging. As the pre-eminent UK parcels delivery company, we are targeting a number of new, growing areas, and delivered two per cent volume growth in a competitive market. We had a better than expected performance in UK letters. GLS, our European parcels business, demonstrated a strong performance with better than expected volumes in domestic and export parcels.”
Will the Royal Mail survive as it is or will the universal letter system die? Should it be nationalised to ensure a universal cheap letter and parcel deleivery service? Your views please.
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