LONDON (dpa-AFX) - Ofcom is calling on Royal Mail to modernize its network and become more efficient. Reducing letter deliveries to five days per week would still meet the needs of nearly all people and businesses. The move could save Royal Mail up to 225 million pounds per year, as per new research from the postal regulator.
Ofcom said that the company failed to make efficiency gains or meet the targets it set itself for improving productivity.
Ofcom insists that Royal Mail must modernize its network to adapt to parcel customers' changing needs, and operate more efficiently. Otherwise, the sustainability of the universal service could be at risk in the longer term.
The postal regulator's research found that the current six-day-a-week letter delivery requirement meets the needs of 98% of residential users and 97% of small and medium businesses or SMEs in the UK. Reducing this to five days a week, but leaving all other elements of the service unchanged, would still meet the needs of 97% of residential and SME users.
It suggests that reducing the letter deliveries requirement to five days a week would reflect postal users' reasonable needs. It would potentially allow Royal Mail to make net cost savings of around 125 million pounds - 225 million pounds per year.
However, Ofcom said that Royal Mail continues to face significant financial challenges and the saving alone would not be sufficient in itself to ensure the longer-term sustainability of the universal service.
Lindsey Fussell, Ofcom's Networks and Communications Group Director, said, 'Our research suggests that people's needs would still be met if letter deliveries were reduced from six days a week to five. It would ultimately be for Parliament to decide whether this change is needed. However, Royal Mail must still modernise and become more efficient, to keep pace with customers' changing needs.'
Ofcom's annual monitoring report found that 2.8 billion parcels were sent and received in the UK In 2019/20- one billion more than in 2013.
Growth in online shopping has seen overall parcel volumes increase at a rate of around 10% per year since 2015. The trends seem to have accelerated during the coronavirus pandemic. Royal Mail reported a 31% increase in its UK parcel volumes between April and September this year.
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