Royal Mail chief warns network ‘not sustainable’ and ‘urgent action’ needed to save it
The chief of embattled Royal Mail has called for “urgent action” as the postal service braces against inflation, dwindling letter volumes and pay awards.
In a rallying cry for change, its chief executive Martin Seidenberg warned the network wasn’t fit for purpose, as Ofcom, the communications regulator that oversees Royal Mail, has been examining how the universal postal service needs to adapt as demand is changing.
Royal Mail wants to cut its letter delivery service from six to five days a week but the government has previously rejected this.
“With Ofcom due to publish options for the future of the Universal Service imminently, now is the time for urgent action,” said Seidenberg.
“We are doing all we can to transform, but it is simply not sustainable to maintain a delivery network built for 20 billion letters when we are now only delivering seven billion,” he added.
It comes as International Distributions Services (IDS), Royal Mail’s parent company, reported its third quarter results on Thursday.
It said Royal Mail achieved its best Christmas performance in four years.
Overall group revenue was up 9.8 per cent on the same period in 2022 as Royal Mail regained some customers but this was marred by increased costs last year from pay increases and inflation.
IDS said it expects to turn an operating profit its second half, despite posting losses of £169m in the first half. It is still expecting to breakeven at the full year.
Strikes hit the postal service in the December 2022 and, following that, in early 2023. An agreement was reached last summer.
But Royal Mail also faces a steep decline in the number of letters being sent, with volumes down 31 per cent compared to pre-pandemic levels. The company is also battling increasingly used rival delivery services like Evri and Amazon.
IDS has today named Michael Snape as the group’s new chief financial officer, starting immediately.