Return to Sender – Are We Seeing the End of Royal Mail?

One of the most fraught entities in the UK is Royal Mail. Still a nationally-controlled organisation and about since 1516, it still has a paid obligation to deliver to addresses across the UK six days a week.

However, following strike action over the last year, it looks like operating at such a loss (around £200-400 million) might be truly the last straw and although the Royal Mail board have said it is a last resort, administration might be the next stage this entity is taken to.

After 18 strike days in 2022, talks reopened in the new year and the union paused industrial action, saying the company had made “significant moves” towards a potential settlement.

So what are the causes? Well after an amazing amount of business over the pandemic, the level of demand simply has not been there and the cost of running such a universal service for an entire country simply does not add up.

With added pressures from the likes of Amazon and their next-day Prime service and the cost of living crisis also taking hold, it means people overall are buying less and there is a significant challenge for a service that relies on a customer base coming back again and again.

With strikes over pay and conditions also taking hold, it seems like a company in crisis and this has been the case for many years. Perhaps the added pressures are coming to a head now.

According to The Guardian, it is thought the boards of Royal Mail and IDS still regard a negotiated settlement as the preferred way out of the crisis, but a special administration under the Postal Act has been explored.

This would mean declaring the business insolvent and unable to pay its dues, raising the possibility of more job losses among its 140,000 employees. Approval would be needed from the government.

It is thought that only the parts of Royal Mail that operate under the universal service obligation – the requirement to deliver to every address six days a week at a uniform price – would be involved. Some parts of the parcels operation, including Parcelforce, would not be affected.

The consensus seems to be a lack of leadership at the helm and potential political firestorms might await if selling the entity is suggested.

More than likely, it is likely The Royal Mail and Parcelforce, its bulk and parcels operation might separate so that this service can still exist. Administration here would possibly bring more problems to the table than it would solve.