Good Times May Be Over For Royal Mail As Parcel Deliveries Slow

Royal Mail has been one of the pandemic’s big winners with shoppers relying on its postal workers to deliver online shopping orders during lockdown. 

The benefits of the ecommerce boom have been borne out in the company’s share price, which since the start of the UK’s first lockdown in March last year has soared by over 245 per cent. 

However, there are signs the good times may be over as parcel delivery numbers have slowed amid the easing of Covid restrictions, a trend the company expects to continue. 

Online deliveries remain elevated as some shoppers are still hesitant about venturing out to the High Street. But fears of a slowdown have hit the shares, which are down nearly 30 per cent on their three-year high of 606p reached in June. 

Investors, therefore, will be laser-focused on parcel volumes when the firm posts its half-year results on Thursday to see just how well deliveries have held up during the transition out of lockdown. 

Costs will also be a key point of interest as Royal Mail tries to make up for years of underinvestment and rewire its business for the age of online retail. Spending on its UK operation alone is expected to be well over £400m next year. 

With letters a dwindling form of communication, the firm’s future hinges on its ability to become a reliable delivery partner for the likes of Amazon. 

There is also the spectre of labour relations, with an agreement between management and unions due to expire next spring.