Ofcom launches investigation into Royal Mail’s delivery performance

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Ofcom has opened an investigation into Royal Mail’s failure to meet its delivery targets for 2022 and 2023.

Under Ofcom’s rules, Royal Mail is required to meet specific performance targets across the year, excluding the Christmas period. Among other targets, Royal Mail must deliver 93% of First Class mail within one working day of collection; deliver 98.5% of Second Class mail within three working days of collection; and complete 99.9% of delivery routes on each day that a delivery is required.

However, Royal Mail did not meet these performance targets in 2022/23. Instead, it delivered 73.7% of First Class mail within one working day; 90.7% of Second Class mail within three working days; and completed 89.35% of delivery routes for each day on which delivery was required.

In deciding whether the company is in breach of its obligations, Ofcom will consider whether there were any exceptional events beyond the company’s control, which might explain why it missed its targets. If Royal Mail does not provide a satisfactory explanation and Ofcom determines that the organization has failed to comply with its obligations, the regulator may impose a financial penalty. In 2022, Ofcom warned Royal Mail that it could no longer use the impact of Covid-19 as an excuse for poor delivery performance.

Change of CEO
Simon Thompson has informed the International Distributions Services (IDS) board of his intention to step down as CEO of Royal Mail. He believes that, following the negotiators’ agreement between Royal Mail and the Communication Workers Union (CWU), it is the right time for the company to move forward under new leadership.

Thompson joined the company as a non-executive director in 2017 and was appointed CEO of Royal Mail in January 2021. The board is in the advanced stages of appointing a new CEO, and Thompson has agreed to remain with the business until October 31, 2023, as part of the transition. Keith Williams, chairman of IDS, will be providing additional oversight and support alongside his board colleagues during this period.

Williams said, “On behalf of the board, I would like to thank Simon for his significant contribution over more than five years at Royal Mail, both as CEO and previously as a non-executive director of the board. As CEO, his leadership, resilience and unwavering drive to ensure that Royal Mail transforms for the benefit of our customers mean we have set a clear path to turn the business around. We are grateful for his dedication and what he has achieved at the company and wish him well for the future.”

Thompson said, “I have been incredibly proud to lead Royal Mail during this crucial period in its 507-year history. The changes we have made, the infrastructure we have put in place and the agreements negotiated with our trade unions mean that Royal Mail now has a chance to compete and grow. That is what I have always wanted, and it is now the right time to hand over to a new CEO to deliver the next stage of the company’s reinvention. I would like to thank my team for their support during a difficult and important time of change.”

Read the Last Mile Prophets’ analysis of how Royal Mail’s future is shaping up following its agreement with the CWU, here.

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