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Royal Mail Transformation to roll out after losing patience with CWU Union

By Chris Dawson February 6, 2020 - 10:02 am

Good news from Royal Mail this morning, at least for ecommerce merchants. Whilst the CWU have said they are preparing another ballot for strike action, having been blocked from the last strikes in the run up to Christmas in the High Court, Royal Mail have declared they are fed up with waiting for the Union to come to any agreement and are going to push ahead with the Royal Mail transformation plan and new robot sortation depots roll out to enable them to deliver parcels next day.

The aim is to get a parcel hub up and running in Warrington, another for which they’re sorting out the lease in the Midlands and will also exploring options for a third hub. The hubs form part of an extension to Royal Mail’s UK delivery network that will see the company introduce a second delivery for next day parcels and larger items and that’s essential for rushing ecommerce deliveries to your customers.

However, the plans to push ahead with the Royal Mail transformation come with a health warning – if the CWU get another strike ballot the new depots, despite automation, won’t do much good if parcels don’t arrive or even worse if postal workers continue to collect from you but then leave them piled up in the depot and don’t load them on trucks to the delivery offices at the other end. Clogging up automated depots will likely be an attractive target if they Union decides it impacts workers. Using your parcels to do this could be a key goal and much worse than simply not collecting giving you the option to use an alternative carrier.

Using an alternative carrier is in fact what a number of merchants decided to do with just the threat of strikes last year which Royal Mail say reduced parcel revenue growth by approximately 0.5 percentage points. Far from being totally reliant on Royal Mail for deliveries, merchants have options for all but the very smallest and lightest items and Amazon Logistics is waiting in the wings to snag more delivery contracts for items sold online.

Royal Mai Transformation Trading Announcement wipes 10% off share priceWith that in mind, in today’s trading update, Royal Mail confirmed profit is expected to be £300-340 million for the 2019-2020 financial year, but warned the city that ongoing industrial relations environment and delays to the delivery their transformation plan, when combined with continuing economic uncertainty, increases the likelihood that they’ll make a loss in 2020-21. Naturally this hasn’t done much good for their share price which has bombed this morning.

On the 6th of February 2019 Royal Mail’s share price was £2.80, £2.22 on the 6th of January 2020, but today at the time of writing it’s currently at £1.69 having lost another 10% of it’s value so far this morning.

“We had a busy Christmas season, which coincided with a General Election for the first time in almost a century. We achieved a high quality service for customers across the UK due to additional investment and, more importantly, the commitment and dedication of our people – I thank them for all their efforts.
 
Overall, our recent trading performance has been broadly in line with our expectations. We confirm adjusted Group operating profit is expected to be £300-340 million (before IFRS 16) for 2019-20.
 
We are disappointed that the CWU has issued a timeline for a ballot of its members for industrial action. We stand ready to invest £1.8 billion to modernise and grow in the UK. We want to reach agreement with CWU; but we cannot afford to delay this essential transformation any longer. So we are proceeding with key national trials and local initiatives, to improve our customer offering and grow the business, whilst maintaining good quality jobs and delivering a sustainable Universal Service.”

– Rico Back, Group Chief Executive Officer, Royal Mail plc

  • Kevin turvey
    4 months ago

    Shocking from royal mail utter disregard for its work force..The only aim is to please shareholders absolute disgrace.

    • Toby
      4 months ago

      There is two sides to every story. Royal mail is woefully behind the times, still relying on letters when they are a slowly dying dinosaur in todays world. I know they haven’t exactly been blame free in all this… but with the unions threatening strike action at Christmas, when most retailers do the most business, the workers where lashing out at those who keep RM afloat as well as the business itself.
      We like many others, gave up and started to transfer more business to our couriers., we have a business to run. If RM don’t move quickly they will become irrelevent by the time it gets sorted.
      My postie is great, in fact my home postie is great…. but still the system leaves me with large volumes of late mail, missing mail and various other issues.
      Last week i personally had 2 first class parcels turn up 3 and 4 days late. A second class parcel that arrived 9 days late. In fact since Christmas the amount of late mail is shocking. Oh and a parcel i posted myself in the works mail…. RM48, was returned to me 2 days later…. Why? There was an old courier label on one side ( normally i remove these but missed this one.) It clearly stated DHL, with a DHL barcode. oh and my address. Really? Is it too much to ask to check for a Royal mail label on a parcel? Someone sorted this and decided that they worked for DHL….
      So yes, there are issues on both sides and if both sides don’t do something quickly then they can all kiss goodbye to their jobs, because companies like mind that send alot of parcels and mail are increasingly filtering it to other companies that are already doing the job and don’t go on strike all the time.

  • SAM
    4 months ago

    I invested a lot of my hard earned cash into RMG and I am no billy big baws fund manager, and it has backfired totally.
    RMG should have been in the perfect position to capitalise on the boom in online and they have really made a pigs ear off it.

    However RMG do need to evolve it is “automation” and it is happening everywhere.

    Workers all over the UK are paying the price of automation, with poorer working conditions, poorer pay, and of course the greed at the top. We are in a race to the bottom society.

    Many a job will not exist soon. Compared to many a worker out there Posties are doing alright, am not saying it is great, one of my mates does this in Aberdeen and says it is the most easy job he has ever had (he does say the management are a complete disgrace however)….
    RMG service is not great right now but the costs keep going up.
    Amazon Logistics have built in 10 years what RMG have had 100s to do and they will just jump in and they will do it all on cost cutting, zero hours of course, poor working conditions, tax dodging etc etc etc, and they will just take it over.

    • 4 months ago

      i thought the value in the shares was in the property – but we’ve seen precious little information on asset value or development potential.

      perhaps the management is going for broke – they are bored to death with the fag – end of 20th century trade unionism – if the CWU want to break the company – let them management will have looked after itself in its employment contracts.

      in fairness therein lies another aspect of 20th century business – the senior management will be smiling whatever the outcome.

      ours is the inconvenience and in the case of the pension deficit not being covered then we’ll inherit thattoo.

  • robin
    4 months ago

    If only RoyalMail gone for up to 5kg parcels and 2x height – 35x45x35cm or even better, round it up to 45cm qube – and charge £5 – all parcels are delivered in vans anyway – they would kill all competition overnight.

  • 4 months ago

    Thank goodness that the “help me Corbyn, your our only hope” , was clearly rejected by the UK electorate, as he would have clearly sort to protect the Royal Mail (and his unionised friends) from competition, creating National Champions, i.e. heavily unionised monopolises, not just in travel (rail), broadband and mail, circa the 1970s.
    Parcel delivery has been moved on, rightly or wrong people are getting used to next day delivery, even on a Sunday (which I think is wrong) , if the Royal Mail are to not just to survive, but thrive, why is investing in automation to improve service levels even an issue, for the workforce???. Surely you would want to see your company investing in innovation to keep up with your competitors???.

    • 4 months ago

      Automation might take jobs and even worse posties wil have to deliver later in the day and the union doesn’t want that and they don’t want Royal Mail taking on new workers who will deliver later in the day either

  • Paul
    4 months ago

    You have obviously put the financial gain of lazy non give a toss me,me,me, merchants before any legal ethical and moral consideration for the employees and the public who i can garauntee you speak highly off there very personal, friendly caring postie. They are more than just a delivery service, they are community gaurdians in many guises,,, You will rue the day a man from Switzerland has destroyed your last Great British public institution that cares at a personal face to face level that so many across the demographic population depend on 24/7..

    • Dave
      4 months ago

      Have to disagree with this one Paul, in that i feel that this is a backwards looking way of viewing the situation – and exactly why RM find themselves in the position they’re in. In the age of internet shopping and beyond, we see the almost daily decline of high-street stores and so-called ‘British Institutions’ who have failed to recognise the signs and move with the times.

      Like it or not, we live in a society of consumerism and instant gratification. This was proven all the way back in 1972 with the famous Stanford University ‘Marshmallow’ experiment. As a species, we’re hard-wired to want things now. Businesses like Amazon, Ali-Baba and JD are at the forefront of providing service, but it’s the consumers that create the demand… regular old Joe-public.

      Yes, we can put on our rose-tinted glasses and lament the days when we’d chat with our local postie and build a raport but the reality, for most consumers is that given the choice between a chat with their postie or a quick and free delivery of the latest ‘must-have’ item – free and quick wins every time.

      Automation reduces cost and increases productivity. Fact. It’s the reason why it exists in the first place.

      I think RM have (finally) switched on to that – shame the Unions can’t seem to see the bigger picture, and would rather hold RM back in the past and see it die completely, than chop off a limb to save the body. Is it sad that automation would reduce a percentage of the workforce? – yes, of course. Would it be sadder to see the business die and that percentage reach 100? – you tell me.

  • Carl
    4 months ago

    2 things Royal Mail need to do; and both WILL increase their annual profit hugely. Just incase anyone from RM management ever read this lol…

    1) Increase the large letter height from 2.5cm to 3cm. Reason: they will have a huge influx of mails from fatbox CDs, larger DVDs, books. That is just 3 areas that I can think of, for items I sell. There will be many other examples such as individual lipsticks..etc.
    Currently, it is cheaper to send for £2.20 by Hermes and have it fully tracked. Royal Mail could grab all that ‘trade’ if those items could go at large letter rate.

    2) Postage was changed a few years ago to be by Size and Weight. It is ridiculous to have something weighing just 25g yet over 2.5cm (Super hero toys in those oval plastic cases like kinder/creme eggs come in. So if it is by size and weight, suggestion 2 is that there should be an exclusion that if an item is less than say 100 – 150g but is small parcel, it can go as a large letter. Again, Hermes is used for these.

    It may only be about £600 extra that Royal Mail make, but I am one person: how many thousands of sellers are there like me around the country?

  • Charlie
    4 months ago

    The sad thing is that the Royal Mail and the Post Office have a fabulous infrastructure between them and could really sweep up a large volume of the ever increasing small to medium parcel market if everyone involved got their acts together.

    Some people seem to see that automation equals job losses, and sadly that may be the case initially. However In the longer term it may secure the jobs that are left and could even increase them if their business grows as a result of said automation.

    The only certainty here is that no change equals decline, which also equals losses of jobs and the benefits to the community that others have rightly mentioned.

  • Jason G
    4 months ago

    Royal Mail or Royal Fail.
    Half the time I’m not in when they try to deliver or they leave a card without ringing the bell and going to collect my mail is a total pain in the neck as my local postal depot closes at 12 a.m. every day.

    Arranging a re-delivery takes two further days which means if you miss a delivery on a Friday I don’t get my mail until the following Wednesday as Saturday is not counted as a full working day.

    I’ve complained about the delivery office opening hours but have been told several times that it’s up to the delivery office and the demand for my area (Forest Gate London) which is an absolute lie as everybody I know agree’s that the opening hours are clearly inconvenient for people who work all day.

    Two deliveries a day would just compound the problem. It would be less aggravating if the mail was delivered the same time every day but it’s not. I have had eight different postmen delivering my mail over the last 6 months. They all choose their own route/order of delivery which means mail is never ever delivered at the same time every day so you just can’t plan around them.

    And they are Forever leaving the elastic bands in the street or on my doorstep.

    The so called service in Forest Gate London is a total shambles.

  • Jim
    4 months ago

    Yep royal mail delivery still lives in the world with a housewife who was at home all day
    Our local mail office is never open after 12pm
    Opening times are to suit the staff not the customer

  • Mark
    4 months ago

    the only issue RM have is the system they introduced is not finished or where it is they do not enforce it.

    A parcel is just marked as delivered. Nothing tells the sender or the receiver where it was delivered or left. That applies to Tracked or confirmation of delivery. So the motorway has been built and then they reached a river and just stopped they did not build the bridge.

    The postman does not leave a card to the customer, and a crazy answer when we mention that is well he may have run out..
    Surely if you take out 200 parcels you only need to take out 150 cards.

    Also the post people really don’t pay attention a day after it says delivered they reply ” I cant remember where i delivered it”.

    I did catalogue deliveries many moons ago and carried out around 150 to 200 deliveries a day and i could picture every house and knew where i would have left it or where i did leave it.

  • Toby
    4 months ago

    I feel your pain Mark… If i had a penny for every’item not received’ that was actually at the sorting office but not card left, i would be rich. Royal mail tell me this does NOT happen… Ironically a few days after they strongly denied it, I chased up a parcel i hadn’t had and amazingly it was at the sorting office. Luckily for me they let me have it without ID, even telling me the postie must have run out of cards…. Sadly many of my customers have been told ‘no card no item’! Despite having photo id. Often they are told they can’t locate a parcel with just a name and address.
    I actually challenged this once as i said that nowhere on the item was there a number etc that corresponded with anything on the card!
    Just another regular issue.
    As for anti automation on the basis of job losses…. That is just a fact of life throughout history. Cars replaced horses, the apinning Jenny, computers etcetc…. Everything evolves.
    Get in to shape or get out of business.

    • Paul Stone
      4 months ago

      As a postie of 20 years why do always hear the negative side of our work, if I had a penny for every letter and package that was incorrectly addressed or not addressed at all that I still managed to deliver correctly I could pack up work now, but we never hear about this ?
      Anyway don’t worry, if Rico Back remains our CEO there won’t be a Royal Mail in the future and then the general public may think we weren’t that bad after all 🦁🦁🦁

  • NorthCrystal
    4 months ago

    Our business collection guy arrives early on most days, waits 5-7 mins in his van (the IT system only allows to collect our bags 10mins before the actual collection time). Yet he always says “it’s busy day” for him. No drop of sweat on him or the van. I don’t criticise (I wouldn’t mind a job with such “benefits” myself). However it all seems like a bad management and time waste in RM. They better wake up as it’s 2020 and competitions is plenty.

  • NorthCrystal
    4 months ago

    Also, being with RM as business customer for last 2 years I come to think the services are not business friendly.

    USO are not Vat elected but you as customer can claim for lost/damaged deliveries. CRL service is Vat liable but no claims so if something goes AWOL it’s your problem. And goes missing a lot. Confirmation of delivery is a joke for another topic.

    Then, recent experience, business collection address change. We moved 4miles to different location yet it took Royal Mail 7 days(!) to call me and agree a collection time. I asked about when collection will commence from new address and the guy didn’t know as “I’m just covering my college on sick leave”. The phone call was 9:20 am. 3:45pm I got call from the collection guy asking where the bags are …. Total fail. Also it was Monday our biggest drop-off and I indicated I would like the new collection to be any day apart from Monday. Yikes.

    We’ re planning to move again in few months time, this one is 100 miles away from current location. Wish us luck.

  • John johnson
    4 months ago

    What do you people expect from a private business? It’s all for profit not service? RM used to have 2 deliveries a day.. people used to get their mail and parcels before they went to work.. with a 2nd delivery for late items.. used to be able to send something at 8pm and it would be there by 9am next day.. so called next day now it might not arrive until 9pm? GPO used to be a huge organisation.. each part has gradually been sold off.. over 500 years of history. There will soon be nothing left.
    As for Amazon? Who do you think got them to were they are now? And still delivers for them.. Local postal services around the world.. maybe the postal services should start up a rival online shopping tv and music service and refuse deliveries from Amazon.. oh and not pay fair tax and pay workers fair..

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