Royal Mail asks to scale back deliveries

Royal Mail has proposed halving second-class letter deliveries and slowing down business mail, in a bid to save £300mn a year. The UK courier, which is part of International Distributions Services (IDS), wants to deliver all non-first class letters every other weekday, as opposed to Monday to Saturday. It has also suggested reducing the delivery speed of standard bulk business mail so it arrives within three weekdays rather than two.

Parcel and first class letter deliveries would remain the same under the courier’s plan, which was submitted in response to the regulator’s call for input on the future of the postal service. 

Royal Mail is regulated by Ofcom and is currently obliged to deliver letters six days a week, despite a sharp drop in volumes.  

“If we want to save the universal service, we have to change the universal service,” said IDS chief executive Martin Seidenberg. “Reform gives us a fighting chance and will help us on the path to sustainability.” 

He added that the proposals could reduce the net cost of the universal service by up to £300mn a year “if fully and swiftly implemented”. The changes would result in no compulsory redundancies and fewer than 1,000 voluntary redundancies, management claimed. 

Royal Mail posted an adjusted loss of £419mn in FY2023 and an adjusted loss of £319mn for the first six months of FY2024. Seidenberg said he had “serious concerns that the urgency of the situation is not properly recognised by Ofcom”. The company is set to post an improved set of numbers for the second half of its financial year, with adjusted operating profit for the period balancing out the first half loss. 

Ofcom is due to provide an update in the summer, while IDS will report its FY2024 results in May.