As an uproar broke out over a leaked regulator document regarding its Universal Service Obligation (USO), UK postal operator Royal Mail owner International Distribution Services (IDS) released its third quarter 2023 results.
Recovering from the protracted industrial disputes of 2023, Q3 volumes and revenues were up almost across the board from 2023, with IDS plc overall revenues of GBP £3,589m (+9.8% y-o-y).
While operating profit for the company as a whole or any division was not reported, International Distribution Services plc saw revenues and volumes up across almost every segment of the business:
Thanking his staff for a good Christmas period where the company handled a muted peak delivery season well, IDS plc CEO Martin Seidenberg said however, “We are doing all we can to transform, but it is simply not sustainable to maintain a delivery network built for 20 billion letters when we are now only delivering seven billion.”
OfCom USO discussion paper leak
Over the weekend, UK news network Sky News revealed that it had seen an OfCom discussion paper due to be released this week looking at the Universal Service Obligation (USO). Where the regulator has no powers to alter the USO itself – this must be approved by Parliament – it is a strong indicator of the direction things might go.
The document discussed the removal of Saturday delivery as a standard letter delivery day. Neither the e-commerce greetings card industry or postal worker trades unions were amused. David Falkner, CEO of Cardology and leading member of the Greetings Cards Association said: “My conclusion is that this is an attempt by Royal Mail to put Saturday and Sunday delivery into a premium service, enabling them to make super-normal returns on a monopoly service.” Falkner continued, “To believe that they have suddenly forgotten how to do that because of the pandemic just doesn’t stack up. I feel like we’re sleepwalking into losing something that’s really important to people.”
Dave Ward, General Secretary of the CWU referred to USO reform as a “sham” on Sky News, adding “It’s about getting to a predetermined outcome and we’re not going to sit back and allow Ofcom, Royal Mail, the government, to destroy what is an important public service which customers still support and you can actually still expand upon with new products and services.” The union almost crippled postal operator through an almost year-long industrial dispute in 2022-23, so a growl from that direction should be taken very seriously.
The USO is a major issue for every postal operator around the world as most transition away from letters to parcels. Reform has already begun in many European countries, and it seems Royal Mail will go the same way. This may well lead to improved profitability on its part, but judging by industry and unions’ immediate response, it is unlikely to be done quietly or smoothly.
Author: Richard Shrubb
