GCA acts over Royal Mail’s call to cut Saturday deliveries

Industry association hauls up postal firm for changing position on Universal Service

 

Industry association the GCA has acted swiftly to buttonhole Royal Mail about its decision to ask the government to move to a five-day delivery for letters – cutting Saturdays from the schedule, while keeping the more profitable six-day parcel services.

The shock revelation early yesterday, 17 November, was hidden low down in the lengthy press release on Royal Mail’s parent company International Distributions Services’ (IDS) half-yearly results.

With the national press on the case GCA ceo Amanda Fergusson seized the opportunity of an already-scheduled meeting yesterday afternoon to express the industry’s deep concern about the potential cut to letter services, which covers greeting card deliveries – and disappointment that this moves away from the position discussed previously.

Above: Parcels are more profitable for the postal service
Above: Parcels are more profitable for the postal service

“We were led to believe that Royal Mail was looking for a premium weekend delivery service potentially in exchange for support for its request to relax some of its Universal Service obligations,” Amanda told PG Buzz.

However, during yesterday’s meeting Royal Mail claimed the huge losses felt by the company, combined with the continued reduction in letters and impact of ongoing strikes – and extensions have just been announced – left it with no option other than to ask the government to move to five days a week.

Fiona Hamilton, head of public affairs Royal Mail Group (RMG), said it is keen to work with the GCA “to find ways to mitigate the impact on the card sector”.

Following a reported £219million loss in the six months to September against a £235m profit the previous year and a warning it may need to cut up to 10,000 jobs by next August, in yesterday’s press release RMG’s non-executive chairman Keith Williams said: “A sustainable future must also include urgent reform of the Universal Service. Government has now been approached to seek an early move to five-day letter delivery, while we continue to improve parcel services.”

Above: Strike action has caused issues with Royal Mail’s finances
Above: Strike action has caused issues with Royal Mail’s finances

He said the difference in performance between Royal Mail and IDS’ international parcel delivery arm GLS – which made a £162m profit – “could not be more stark”, citing the deadlock with the Communications Workers’ Union over its pay demands and the company’s call for wholesale changes to adapt the business to modern life, which has led to on-going postal strikes, as the major issue.

He added: “The board reiterates that, in the event of the lack of significant operational change in Royal Mail, it will look at all options to preserve value for the group including the possibility of separation of the two businesses.”

The GCA council’s Royal Mail sub-committee is led by council member David Falkner, director of Cardology, who said: “Both the timing and content of Royal Mail’s announcement appear somewhat curious, in circumstances where Royal Mail have consistently told us they recognise our customers want their greeting cards to arrive at the weekend, but Royal Mail have yet to develop their promises that would meet this need.

Above: The GCA’s David Falkner (left) and Royal Mail’s Keith Williams
Above: The GCA’s David Falkner (left) and Royal Mail’s Keith Williams

“It’s also unclear why Royal Mail appears to be asking the government to use the exceptional strikes as the reason to permanently release them from their current universal service obligation when, only last year, we understand they were asking for their record profits to be treated as exceptional items linked solely to the pandemic, and therefore excluded from calculations that directly affect the price our customers pay for their stamps.

“As such, we’re looking forward to speaking further to Royal Mail and related parties to understand their plans. We cannot currently see how the government can agree to this change without being able to explain to the British public how their card-giving needs will be met, particularly in the run-up to Christmas.”

A further meeting is planned between the GCA and Royal Mail, including its commercial department responsible for new consumer products, to talk through both the challenges and options for pricing and accessing different products for weekend deliveries.

While hoping Royal Mail will rethink its strategy, the GCA is also galvanising support from its membership, consumer media, and by forming alliances with other interested parties, such as the Professional Publishers’ Association which has concerns as many print magazines are mailed out to arrive on a Saturday.

The GCA is also drawing on the skills and contacts of PR company PR Direct, co-owned by Sarah Selzer and Mark Chapman, which is issuing a press release to the national media today, 18 November, expressing both the industry and public concern over the threat to the postal service.

Above: Deliveries like this could become extinct on Saturdays
Above: Deliveries like this could become extinct on Saturdays

On the Royal Mail strike front, talks with the union at conciliation service Acas were due to finish on Tuesday, 15 November, but are continuing in an effort to resolve ahead of the peak Christmas card-sending period.

However, the CWU has just announced extensions to its industrial action, which was due to end on 1 December, deliberately targeting the festive period with Christmas Eve now a strike day along with 9, 11, 14, 15, and 23 December.

In reaction to an article in the Telegraph, covered in PG Buzz, which suggested cards and letters are not being delivered on time, Royal Mail assured the GCA that all post is being delivered outside strike days, with priority given to parcels and special delivery mail on strike days only.

The company is the only UK mail firm governed by the USO, and changes require the Business Secretary to bring forward secondary legislation to amend the Postal Services Act 2011, but a government spokesman said there are “no current plans to change the universal service”.

He added: ‘While we recognise the issues that Royal Mail raise, there would need to be a strong case that showed changes would meet reasonable needs of users of postal services and ensure the financial sustainability of the universal postal service.”

Top: Cards and letters will be affected if Royal Mail cuts Saturday deliveries

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