Royal Mail can reduce deliveries to ensure survival, regulator says

ROYAL MAIL could cut deliveries to five or three days a week, or slow the speed of delivery to three days or longer, under options to ensure the service survives in the future, the postal regulator said on Wednesday (24).

Letter volumes have halved since 2011, regulator Ofcom said, increasing the risk that the universal postal service, which offers nationwide delivery six days a week, will become financially and operationally unsustainable.

Ofcom chief executive Melanie Dawes said: "Postal workers are part of the fabric of our society and are critical to communities up and down the country.

"But we're sending half as many letters as we did in 2011, and receiving many more parcels. The universal service hasn't changed since then, it's getting out of date and will become unsustainable if we don't take action."

Royal Mail said reform was urgently needed to protect the future of the one-price-goes-anywhere universal service.

"We are doing everything in our power to transform, but it is not sustainable to maintain a network built for 20 billion letters when we are now only delivering seven billion," chief executive Martin Seidenberg said in a statement.

Royal Mail, which traces its history back to the 16th century, aims to deliver letters the next business day for the price of a first-class stamp, currently £1.25. Slower second-class post is priced from £0.75.

Royal Mail was privatised in 2013, ending nearly five centuries of state ownership.

Royal Mail, owned by the holding company International Distributions Services, is battling a sharp decline in letters as email has increased and services such as banking have gone online.

Parcel volumes have increased but the company is under financial pressure. It made an adjusted loss of £419 million in its 2022-23 financial year.

Shares in the group rose 1.8 per cent in early deals.

The Communication Workers Union (CWU) said Ofcom had no credibility in the ongoing debate about the postal service.

"The response to the leaked information over the week showed that CWU members, the public and politicians are united against the deliberate, manufactured destruction of the postal service," general secretary Dave Ward said.

(Reuters)