UK regulator Ofcom has announced that Royal Mail will be allowed to cut its Second Class delivery service as part of its review of the universal service obligation.
Under the changes, Royal Mail will deliver Second Class letters in a two-week cycle, on Monday, Wednesday and Friday one week and then Tuesday and Thursday the next. The new service will start on July 28.
Changes will also be made to Royal Mail’s delivery targets, to 90% of First Class mail delivered next day (down from 93%), and to 95% of Second Class mail delivered within three days (down from 98.5%). However, there will be a new target of 99% of mail being delivered no more than two days late to incentivize Royal Mail to cut down on long delays, for which it has previously been fined.
Commenting on the reforms, Natalie Black, Ofcom’s Group director for networks and communications, said, “These changes are in the best interests of consumers and businesses, as urgent reform of the postal service is necessary to give it the best chance of survival.
“But changing Royal Mail’s obligations alone won’t guarantee a better service – the company now has to play its part and implement this effectively. We’ll be making sure Royal Mail is clear with its customers about what’s happening, and passes the benefits of these changes on to them.
“As part of this process, we’ve been listening to concerns about increases in stamp prices. So we’ve launched a review of affordability and plan to publicly consult on this next year.”
Huge savings
According to Ofcom, Royal Mail could realize annual net cost savings of between £250m (US$340m) and £425m (US$578m) with successful implementation of this change, enabling it to invest more in improving its delivery performance.
The regulator said on its website it had told Royal Mail “to hold regular meetings with consumer bodies and industry groups to hear about the experiences of people and businesses as it implements these changes”.
Martin Seidenberg, group chief executive officer at International Distribution Services, which runs Royal Mail, said, “We welcome today’s announcement from Ofcom. It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service.
“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”