Parcel volumes have risen over the course of the pandemic – likely reflecting the growth of online sales. Image courtesy of Royal Mail
Royal Mail says its UK parcel deliveries appear to be settling at a new normal – higher than before Covid but lower than during the pandemic.
Parcel deliveries appear to be following a similar pattern to online sales figures – which fell in June, July and August compared to the same time last year, after sales peaked in February 2021, according to ONS figures, but are still well ahead of pre-pandemic levels.
Some 34% more parcels were sent via Royal Mail within the UK in the five months to August 2021, compared to the same time in pre-pandemic 2019. But parcel volumes were 5% down on the same time last year. At the same time, revenues from domestic parcel deliveries were up by 44.5% on the same time in 2019, and grew by 4.1% on last year.
International parcel volumes fell more sharply than UK parcels, dropping by 12% over the period, compared to last year. This, says Royal Mail, is down to factors including increased customs processing and reduced air freight capacity. Brexit is likely to be a factor, since that introduced new customs bureaucracy in January 2021. Royal Mail says it has improved customs capabilities that come into effect in the second half of this year. “A focus on driving additional import volumes is targeted to support an improved outlook for international in H2 vs H1,” it says in today’s figures.
Revenue from overall parcel deliveries – including international parcels – grew by 33.3% in the five months to August 2021, compared to the same time last year. Royal Mail Group revenues of £5.1bn in the year to August were 8.2% ahead of last year, and 17.7% ahead of 2019. That includes Royal Mail revenues of £3.5bn, 7.2% up on last year and 12.1% up on 2019.
Keith Williams, chair of Royal Mail, says: “In Royal Mail, we are increasingly confident that domestic parcels are re-basing at a significantly higher level than pre-Covid and believe we are maintaining our share of the market. Domestic parcel volumes are up around a third compared to pre-Covid. Domestic parcels performance continues to be more robust against ongoing challenges in international. Whilst we continue to expect further normalisation of parcel performance as we unwind from the pandemic and anticipate some upward pressure on costs, both adjusted operating profit and margin are expected to be higher in H2 compared to H1.”
Letter volumes went in the opposite direction to parcels, growing by 18.3% on last year, and declining by 7.3% on 2019. That, says Royal Mail, reflects “the ongoing structural decline in letters”.
Our view: It’s interesting that Royal Mail now thinks that its parcel business will be larger long-term than before Covid-19. Its calculations likely reflect an assumption that shoppers will continue to make more of their purchases over the internet than they did before Covid-19 - and that the online shift will be a permanent one.
via https://AiUpNow.com September 23, 2021 at 07:54AM by Chloe Rigby, Khareem Sudlow,
