International Distribution Services PLC, the parent company of Royal Mail, published its half year results on 17 November. As several news outlets have commented, the section that deals with Royal Mail contains an unwelcome proposal “Government has been approached to seek an early move to five day letter delivery, whilst we continue to improve parcel services”
Here is the section in the IDS results that relates to Royal Mail.
- Revenue 10.5% lower period-on-period. Due to management action, strike impact has been contained. Revenue flat vs. H1 2019-20 (pre-pandemic)
- Five point plan to stabilise the business already underway with a focus on rightsizing the business, tighter cash management and improving operational grip
- Successfully completed Delivering for the Future management change and agreed a new pay deal with Unite/CMA
- Talks with CWU continue although we are already moving ahead with required changes. Talks will cease if further industrial action goes ahead
- Ensuring future sustainability depends critically on urgent reform of the Universal Service.
- Government has been approached to seek an early move to five day letter delivery, whilst we continue to improve parcel services
Just think about a company that sends out goods to customers via Royal Mail. Anything mailed on Friday will only arrive on Monday. Anything ready to send out on Saturday will sit at the Post Office and only go out on Monday.
Companies that offer same-day dispatch by First Class Royal Mail will continue to do so, but goods dispatched on a Friday will now not arrive the next day.
So if same-day dispatch is a selling point, it will go out the window for one of the five days that it offers the service if Government agrees to IDS’s proposal. Put another way, it will lose 20% of its value as a proposition if the Government says yes.