Royal Mail parcels revenue overtakes letters on pandemic

LONDON (AFP) – British postal operator Royal Mail yesterday said revenue from parcel deliveries has for the first time overtaken that from letters in the wake of the pandemic.

Reporting results for its first half, or six months to the end of September, the former state-run company said growth in online shopping during the coronavirus outbreak led to total group revenue growth of almost 10 per cent to GBP5.67 billion (USD7.39 billion) year-on-year.

“For the first time, parcels revenue at Royal Mail is now larger than letters revenue, representing 60 per cent of total revenue, compared with 47 per cent in the prior period,” Royal Mail’s Interim Executive Chair Keith Williams said in an earnings statement.

“Whilst we have done exceptionally well in terms of revenue and have seen real growth for the first time since privatisation (in 2013), we have recorded a first half… operating loss of GBP176 million” – largely owing to restructuring charges.

Royal Mail added, “We have also incurred significant costs due to increased parcel volumes and manual sortation of much of this additional volume through our network, costs related to COVID-19 such as protective equipment, overtime and agency staff, as well as social distancing measures.”

Royal Mail said it was recruiting about 33,000 temporary staff to meet customer demand around the peak year-end festive period.

Royal Mail delivery vans are parked at the Mount Pleasant sorting office in London. PHOTO: AFP

It said it would invest GBP100 million “to ensure… we deliver for our customers and continue to support the government’s COVID-19 testing programme”.

Amid the pandemic, Royal Mail last month announced plans to begin collecting parcels from United Kingdom (UK) homes for a fee – avoiding the need for customers to visit a postbox or postal office.

Royal Mail employees have enjoyed elevated status during the coronavirus pandemic thanks to their key role in delivering virus test kits and helping businesses survive the economic fallout.

The company also stepped in to help the likes of Amazon fulfil its deliveries during Britain’s initial nationwide lockdown for around three months to late June.

Royal Mail is, however, facing a slump in its core letters business as people increasingly go online to communicate.

An inability to turn around the core business quickly enough was a factor behind the departure in May of chief executive Rico Back.

His exit after less than two years in the role came also after union bosses accused the company of being slow to provide protective equipment such as masks, gloves and sanitiser to workers at the start of the outbreak.

Williams, a former British Airways chief executive, has taken on the role vacated by Back until a permanent successor is found.