Does Royal Mail have a Future?
I am not an expert on Industrial Relations but the news that Royal Mail is about shed 10,000 jobs in order to be leaner, meaner and more profitable comes as no surprise. It needs to do something to stay afloat. In fact, I am surprised it still exists. They seem to survive largely by delivering junk mail.
I have grown accustomed to my wife buying a lot of stuff on-line, especially from Amazon, and getting these items delivered quickly and efficiently, even into the late evening, usually the day after purchase. Indeed, Amazon was so disgusted with Royal Mail's slack service that it encouraged the start of alternative methods of delivering parcels to its customers. Royal Mail is now suffering the consequences. If it had the will to compete - it still has a monopoly on mail - it would not be in this difficult position, top-heavy and sluggish.
Royal Mail employs some 140,000 people. It says it may need to cut up to 10,000 jobs by next August, blaming strike action by its workers and the continuing decline of its core business. Recently in an unscheduled trading update a day after its workers staged a 24-hour strike over pay and conditions, Royal Mail's parent company, International Distributions Services, said "thousands of roles would have to go at Royal Mail because of damage and disruption caused by industrial action, as well as declining parcel volumes".
Royal Mail said it expects to make an annual operating loss of about £350m in the year to the end of March 2023. It said that could rise to £450m if customers turn to rivals because of the disruptions to its delivery services. The company said that it was looking at making redundant up to 6,000 full-time frontline jobs in delivery and processing by the end of August 2023. Overall, it is seeking a reduction of 10,000 full-time roles over the same period and said that more might have to go if new strike dates are announced.
But that is only part of the story. Presumably to fill the gap in lost revenues from their traditional mail carrying business, Royal Mail is also selling off property, mostly post offices that are surplus to requirements, many in prestige locations. On a recent trip to Bury St Edmunds I saw a wonderful old Victorian Post Office being converted into townhouse apartments. The Post Office itself had relocated into the W H Smith Newsagent next door. The loss of such a beautiful Post Office is a tragedy but, frankly, who needs the Victorian Post Office as an institution today. Technology provides many alternatives to this once great service. Sadly, and for whatever reasons, Royal Mail limps along today on one leg, no longer able to make speedy and efficient deliveries like those of 150 years ago.
Expect to see more inner-city post offices sold to property developers. Its how SAPO makes ends meet today!
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I think the writing is on the wall. Any organization or organism that cannot adapt is bound to die out. The current view in the UK is to move away from common ownership of essential services and to turn them into profit centers. The concept of the Post Office was to be able to reach anyone within a reasonable time and an average cost. So yes it might have cost 4d to sent letters to a far away place, but charging 1d for the bulk of the mail in cities and towns contributed to that cost. And the Post Masters always achieved to balance their budgets.
I very much doubt that the Royal Mail's problem is the 10,000 employees you quoted. It is deeper than that. UK needs a revamp in all sectors and a better "inner focused" Government.
I don't disagree with your comments, Yannis. I hope Royal Mail can sort themselves out and in doing so provide a better service than they do at present. If not, then in terms of cost-effectiveness and reliability, we might do better to use an Amazon alternative rather than Royal Mail. That said, I am very reluctant to be governed by Amazon or Big Tech which appears to be the way we are going.
A member phoned me yesterday after this post. He told me that Royal Mail had conducted an investigation into how to turn itself into an organisation capable of competing with Amazon deliveries. Its clever, well-paid researchers, analysts and specialists had, he said, concluded in their report that Royal Mail would have to increase internal investment by something like 200% in order to achieve this desired goal. I guess that means putting postage rates up. Read on!
Swap your unused stamps for new barcoded stamps
Royal Mail is already looking at alternatives ways to increase revenues. One of the first areas they are going to tackle is to stop the use of old stamps to pay postage. What particular galls Royal Mail - and which hits them below the financial belt - is people, like me, using stocks of old 1st and 2nd Class stamps ie. ones without a value printed on them. As an example, I bought 2nd Class stamps at 19p many years ago. As of 4th April, 2022, the price of a First Class stamp rose by 10p to 95p and the price of a Second Class stamp increased by 2p to 68p. My investment has increased almost fourfold in value - and Royal Mail sees no benefit from it.
So, as of 1st February 2023, Royal Mail will no longer be accepting these stamps. It will be replacing them with modern bar-coded ones. Non-barcoded stamps can be used until 31 January 2023. Royal Mail encourages you to use up your stamps, if possible, before then. You can go on-line to get a form that will allow you to swap your unused stamps for new barcoded stamps to the equivalent value. The stamps affected are the regular 1st and 2nd Class ‘everyday’ stamps featuring the profile of HM The Queen and those that show any other value. Non-barcoded Christmas themed stamps will continue to be valid for postage and don’t need to be sent for swap out.
See image below.
There is a down-side to these new barcoded stamps if you pay on-line and print them off at home. The barcode could contain details about you, the sender. A simple scan of the letter will tell 'the authorities' who has sent the letter. Should you be worried? I'm not but I do not like it. I prefer to keep my anonimity at all times.
Timed delivery slots as of next year
Stamps are integral to the Royal Mail's core business - a monopoly on mail (letters and junk mail) delivery. It can build on this unchallenged base to begin to fend off 'parcel' competition from Amazon.
In this regard, Royal Mail has announced it will offer customers a new service which will allow customers to specify a time window for receiving their parcels. There will be three tiers of delivery. The current base service will remain but two tiers of premium parcel deliveries are expected to be added at extra cost. A middle tier, reportedly called “My Choice”, will allow customers to choose which day their items will be delivered. The most expensive tier will allow consumers to choose a day and a specific time slot for their deliveries. I believe that this was the sort of thing that Britain's Victorian post office did almost as a matter of course!
Royal Mail is reportedly trialling deliveries by drones. This is something that Amazon have already proposed. One suspects that Royal Mail is playing catch up. What we in the UK must hope for is that Royal Mail does not catch up with SAPO's race to the bottom.
SAPO's race to the bottom
Further to my comment that in South Africa SAPO is selling of its post offices, my informant told me that the post office in the town of Underberg in Natal has recently closed down. (Apparently, so have a further 130 post offices around SA, including Muizenberg where South Africa's oldest building outside the Castle, "Het Posthuys", (Dutch. the Post House. Post as in 'Outpost), has stood since 1673.).
The reason for the loss of Underberg Post Office is because SAPO has failed to pay the rent on the premises it used as the town's post office for over three years. This suggests that SAPO is some long way down the slippery criminal slope to commercial irrelevance. It is also alleged that SAPO has also not paid R700 million towards its staff medical aid contributions, leaving about 22 000 people at risk of losing their medical aid. The Democratic Alliance has written to the National Head for the Directorate for Priority Crime Investigation, (the Hawks), Lieutenant-General Godfrey Lebeya, to request an investigation into large-scale fraud at SAPO. We must wait-and-see!
According to another source, SAPO's main activity is processing social security payments and motor vehicle licences, neither of which provide anything like the past income stream it had from selling stamps and delivering mail efficiently.
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Thanks for the update Steve. As to SAPO it was to be expected.
I was in Cyprus last July and went into the Larnaca Main Post Office. What a change, most of the reception area is now for "Citizen Services", such as renewing IDs, etc. Only one counter was used for post. The queue was too long, so I left, but it made me think that this was a good way to downsize, sharing with other Government Departments.
Will take some photos next time I am there.
I made a trip to Cape Town in about 1994. While there I decided to visit the black marble GPO that stood between the flower-sellers and the Parade. I had childhood memories of all these places, especially the flower-sellers shouting like fish-wives, the water splashed from the troughs that they used and the heady fragrance of the blooms. But what I really wanted to see again was the wonderful Art Deco Post Office. I remembered it as a cool and civilised cathedral of calm set apart from the city's cacophonic sunshine outside. I was terribly disappointed. The place had been gutted and turned into an indoor market, the murals of van Riebeeck landing at the Cape and of the Union Castle liner in cream and lilac steaming out to sea in a south-easter hidden under wraps, a post-democratic embarassment, a hangover of segregation and Apartheid. Nearby a group of young White South Africans stood in equal shock at the scale of the loss and what it meant. "They are removing our history," said one. I don't know why but that comment annoyed me. As if White South Africa had ever truly existed by itself and without Black South Africans living among us! Yes, I was saddened by the loss of the GPO and its murals of life at the Cape but somehow I was fatalistically resigned to change like this and ultimately the revision of 'our history'. I recalled Black people having to use the rear, Parade entrance to access 'their' segregated counter 3 in the GPO. All a part of 'our history' too. This change was well-intentioned, no doubt, but its virtue-signalling probably allowed the start of a wider rot within society, the ANC and SAPO. Today the consequences are an immediate and present threat to the security of thousands of SAPO workers.
I have just taken receipt of a DHL parcel which contained something my wife bought yesterday. I was surprised it was delivered by DHL whom I view as expensive. The postage on this item was £5 I believe, which was IMO relatively inexpnsive. .... And later again this morning we received another parcel, this time by DPD (?), both delivered by noon. What is ironic is that yesterday Royal Mail was on strike!
Pricing structures are often illogical and lead to odd results - recently I sent a 700g package of research samples to Spain (from the UK); to avoid the risk of loss, I was advised by my Spanish colleague to use Fedex, who were quoting a cost of close to £50; DHL were quoting over £20; Royal Mail charged around £10 for recorded delivery and the package has arrived safely. One problem is that with poorly-regulated competition, the market is distorted by the purchasing power of very large customers - Fedex quotes a one-off price of £50 because they don't want to deal with one-off or very small customers,
The underlying question is whether the state should ensure a reasonable level of basic communications services at a reasonable cost for all Once you open those markets up to privatisation and competition without effective universal service obligations, large firms tend to concentrate on the easy targets; small customers are no longer effectively and cheaply subsidised, and instead get expensive service, poor service, or no service at all. Looked at in the round, society often loses more than it expects, and all too often the only gainers in the long term are those who own large businesses, and their senior managers. I'm not saying Royal Mail and BT were perfect - far from it; but privatisation isn't a cheap and easy fix.
I would prefer it if Royal Mail's competitors were allowed to just get on with it and deliver parcels with the same speed and efficiency they currently do. Royal Mail needs to have a competitor it can measure itself against if it is to have a future. If any regulation is needed it should probably target Royal Mail to get them to work with more efficiency and to hold them to account when they are not. I am sick to death with expensive Royal Mail Next Day delivery services that arrive days late and signed-for services that are just stuck through the door. This is not personal. My post lady is an amiable and hard-working person (who, it must be said, has on two occassions in the last year posted two items of my mail to the wrong house). It is the Royal Mail system that is at fault ie. both managers and workers. It is probably held back by the mindset that comes from decades of being run as a state-funded unionised monopoly. As a measure of Royal Mail's failure, parcel delivery is a booming industry. Royal Mail had a head start over the new kids on the block. It still has a monoply on mail (letters). That is perhaps a part of its problem - delivering mail is no longer the most profitable business to be in. (That is parcels.) Some would have a future government give the Royal Mail a monopoly on parcels also. I shudder to think of the consequences. Amazon would probably quit the UK in disgust if such happened. After all, they only started their delivery system out of desparation for something that worked and disgust at Royal mail services which did not. A classic example of the spirit of free enterprise and initiative overtaking the old and outmoded .... A bit like Rowland Hill and the introduction of adhesive stamps (almost 200 years ago!).
I think this post is almost exhausted. It is from my side.
Quoting first Charles Darwin and secondly Prime Minister P. W. Botha of Apartheid South Africa, species and institutions must either "Adapt or Die". The world has changed a lot but Royal Mail only a little. It has not done enough to adapt to a changing and competitive world, probably not enough to survive. It had the opportunity to meet Amazon's needs but repeated and disruptive strike action saw the on-line store look for more reliable delivery alternatives under its control. Today Royal Mail appears to survive on a lean diet of letters and junk mail. Among its short-comings as a modern commercial institution capable of adapting to social change is its failure to provide efficient and competitive services that supported rather than obstructed the rise and rise of the online world, most especially Amazon.
It is not true to say that Amazon does not use Royal Mail to deliver goods today. It does in some instances but it enjoys only a small bite of the large Amazonian cherry. Amazon also uses Royal Mail to carry returned items from collection points in traditional post offices. This somewhat sadly sums up the British mail carrier's fortunes. In addition, the many small companies that seized the opportunity to jump on the Royal Mail mail van have, despite intial teething problems, now upped their game. One such company is DPD who delivered goods to me yesterday less than 24 hours after ordering them. Rather than invest in infrastructure like post offices, DPD use a variety of collection points, one of which is in my local Co-Op. Another local shop, Budgens, houses a small Royal Mail post office counter. Clearly, Royal Mail have perceived the need to downsize, to be leaner and meaner.
What we are experiencing in the UK mail market is a growth of choice. We are being freed from a narrow and prescriptive service run at risk of the whim of unhappy workers. Unless a future government of the UK restores a total monopoly on postal services to Royal Mail, it is going to have to learn to live with the loss of its parcel business. If any government were to give Royal Mail a total monopoly it would probably do so in the idealistic expectation that Royal Mail staff would not go on strike. That seems as likely as a leopard changing its spots and hens growing teeth. Given this perceived inherent unreliability, I will stick with the current competitive status quo.
"Royal Mail Workers Union calls off planned strikes after legal challenge". (Guardian Business 2022/Oct/30.)
Planned strikes by Royal Mail workers in the next two weeks have been called off after a challenge by the company.
Members of the Communication Workers Union (CWU) are involved in a long-running dispute over pay and conditions. A series of strikes has taken place in recent weeks and more had been planned on 2, 3, 4, 8, 9 and 10 November 2022.
The union said that after a letter from Royal Mail’s legal team, it had decided to withdraw industrial action notices for the next two weeks. It added that strikes will resume on Saturday 12 November.
The CWU's General Secretary, Dave Ward, said: “We recognise the deep frustration felt by many members over this decision … The current focus of the coming days will be negotiations that can hopefully achieve a sensible deal to end this dispute.”
The CWU’s acting deputy general secretary, Andy Furey, said: “We entirely understand the anger felt by many over the decision but we believe it is a necessary move to protect our dispute. Our members have been facing down serious harassment from the highest levels of Royal Mail as they defend their industry and those communities they serve. They will not be forced into submission so easily, and we will be reminding the company of their determination at Acas in the coming days.”