Royal Mail Reaps The Benefits of Early Planning and Investment

The reported increases in parcel business volume by major players in this competitive arena provided further evidence that the UK’s fascination with shopping online continued in the lead-up to Christmas. Royal Mail reported they handled 120 million parcels in December 2014. This was a 4 per cent increase on December 2013. Yodel also reported an increase of 11 per cent total of 15.5 million parcels for a similar period. With the exit of City Link from this competitive market, most of their former competitors expect to gain from their departure but have no figures yet, to say by how much.

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Royal Mail was able to meet this increase in demand by early planning and investment in sorting capacity, temporary hubs and staff training. The Christmas peak in demand has improved the company’s overall performance for the first nine months of the financial year. They managed to secure a 3 per cent increase in parcel business during this period. Revenue didn’t match the growth in volume but indications are that it increased slightly in the last three months of 2014 in comparison to the previous six months.

ParcelForce Worldwide achieved a 10 per cent increase in volume. Revenues failed to keep pace with the growth in volume. The major contributory factor for this was the fiercely, competitive market forcing prices down.

Europe continues to be a high growth market. GLS Royal Mail’s European division enjoyed increases in both revenue and volume of 8 per cent from March – December 2014. Royal Mail is confident that they will meet their end of year predictions.

If the continued trend towards online shopping continues, Royal Mail should be flexible and visionary enough to capitalise on this increased volume in parcel business. It should also help offset the downturn in the letters market which fell by 3 per cent over the same period.

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