We need to make these price changes to ensure we can continue to maintain and invest in the one-price-goes-anywhere universal service for years to come.” It is vital that the universal service adapts and stays both relevant and sustainable.
We are seeing a fundamental change in consumer needs with a greater shift in demand from letters to parcels. We have to carefully balance our pricing against a continued decline in letter volumes and the increasing costs of delivering letters six days a week to an ever-growing number of addresses across the country. Letters have declined by 25% compared to pre-pandemic. Nick Landon, chief commercial officer at Royal Mail, said, “We appreciate that many businesses and households are facing a challenging economic environment and we are committed to keeping our prices affordable. Being required to provide a service that consumers have said they no longer need, at a significant structural cost to Royal Mail, increases the threat to the sustainability of the universal service. Ofcom’s research shows that a five-day letter service (Monday to Friday) would meet the needs of 97% of consumers and SMEs.
In 2022, Royal Mail requested that the government amend the universal service obligation from six days a week to five for letters – in light of changing consumer needs and the company’s materially loss-making position.Īcross Europe, the median price for the equivalent of a first-class letter service (0-100g) is £1.25 (US$1.50).
Royal Mail is currently expected to report an adjusted operating loss of £350m (US$419m) to £450m (US$539m) for 2023.
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