Ahead of a rumoured breakup of the organisation International Distribution Services (formerly Royal Mail Group) has reported a large drop in revenues and an operating loss in the first half of the financial year.
The Group reported a total operating loss of £163 million, a fall from £311 million in the first half of 2021. The adjusted operating loss was £57 million, a massive fall from an almost half billion pound adjusted operating profit in the first half of 2021.
Amongst the figures, Royal Mail’s domestic arm had a loss of £219 million, a drop of almost £500 million from the first half of 2021. In its report, the postal operator attributed this to “weak parcel volumes, inability to deliver productivity improvements and impacts from industrial action”. As can be seen in yesterday’s news article by Apex Insight, the postal worker’s union disagrees strongly with this standpoint.
The international arm, GLS, which is rumoured to be sold off in the coming year, had an operating profit of £162 million, down 4.1%. This organisation is less unionised and has far fewer protections for its delivery and sorting personnel.
Simon Thompson, CEO of Royal Mail said of the problems at his organisation, many of which have appeared under his leadership, “We have always been clear we need change to survive. We have started turning the business around and will do whatever it takes. We have worked hard to deploy our contingency plans to minimise disruption to customers and impact on revenue. Our infrastructure plans are on time and we are now making the operational changes to turn Royal Mail into a thriving business that will provide great service for our customers at a competitive price and long- term job security for our people.”
In a veiled threat to the Communication Workers Union representing 115,000 delivery and sorting personnel at Royal Mail, the CEO said, “We would prefer to reach agreement with the CWU, but in any case we are moving ahead with changes to transform our business.”
Perhaps desperate to keep its combustion engine production running, a senior member of BMW’s management has claimed that ‘e-fuels’ – manufactured hydrocarbon fuel – should still be an option in energy mixes of the future.
This is despite e-fuels still putting CO2 into the atmosphere and not being removed at anything like the same speed.
With few exceptions, car and truck manufacturers’ leadership are still clinging onto a future for internal combustion engines. Despite its much heralded move to electrifying its vehicle range, BMW is still investing in combustion engines as part of a ‘technology neutral’ approach to zero emission vehicles.
“To be technology open includes e-fuels,” Peter Lehnert, vice president of research and new technologies with the BMW Group, said.
“However, I think there’s a lot of research to do to scale it up to the potential where it plays a major role in the whole energy mix,” he added.
“I think it’s always good to have different opportunities. We invest in the combustion engine, as there might be chances for them in the future. For urban mobility I’m sure it will be electric,” he said.
E-fuels are manufactured hydrocarbon fuels where hydrogen is added to CO2 to create the fuel. They are compatible with current combustion engines. The theory goes that the CO2 is captured from the atmosphere for production and then released in combustion, thereby being labelled carbon neutral. Most industrial CO2 isn’t captured from the atmosphere and 98% of hydrogen is extracted in a highly carbon emitting process from fossil fuels.
“In the end, e-fuels need to be produced by green power, otherwise it doesn’t match our targets under the European Green Deal,” said Lehnert.
This is a case of highly conservative, often climate change denying automotive executives clinging onto fossil fuels even while the world needs to move away from them.
PostNord has announced a 2% drop in net sales for the third quarter of the financial year, and a large drop in operating income.
Net sales for the quarter were SEK 9.456 billion (£749.25 million), while operating income (EBIT) plummeted from SEK 323m (£25.59m) last year to SEK 65m (£5.15 million) this year’s financial quarter.
Explaining the situation, Annemarie Gardshol, CEO of PostNord said, “Over the year, the rate of decrease in parcel volumes in relation to the comparative quarter last year slowed. During the quarter, parcel volumes decreased by -4 percent (6) while mail volumes fell -11 percent (-9). The decrease in income for the Group is attributable in the main to our Danish operation and our Direct Link business. In addition, our income was adversely affected by higher costs arising from the challenging macro situation.
“The adaptations of the business that PostNord embarked on in early 2022 are continuing and have gradually been intensified. We are taking decisive action here and now, with further price adjustments for our products and services, as well as fuel surcharges for transportation. We are also adjusting our capacity and our offering. We are clarifying our direct mail portfolio through a greater focus on addressed direct mail and more digital and target-group oriented services. At the same time, we are discontinuing the unaddressed direct mail service.”
Even with fewer than half normal peak season staffing levels and being unable to access the temporary infrastructure it needs, the US Postal Service is confident it can achieve minimum service levels.
In a congressional hearing this week, the postal operator’s leaders said it was about to hire 20,000 seasonal staff, less than half the normal numbers for the peak season. Postal management pointed out it had converted 100,000 part time workers to career personnel since 2021 and has plans to convert a further 10,000 in the coming weeks. This will reduce the need for seasonal staff.
Overall staffing levels have dipped by 5%, even if the US Postal Service can achieve the numbers of seasonal workers it has set out to. Gregory White, USPS’ executive manager of strategic initiatives, promised the agency would be prepared. “The reality is this year we are less reliant on peak season heroics than we have been in the past,” White said.
An issue could arise with the postal operator being unable to get the temporary sorting and handling space it usually uses for the Christmas holiday season. According to the Inspector General it has only secured 28% of the space it needs – 25 units of the 88 required. There are contingency plans in place – such as the use of tents – to meet demand as required.
“We never have enough people, but we manage. We move people around and we use overtime,” said Edmund Carley, president of the United Postmaster and Managers of America. “It will be a successful season, I’m sure.”
Independent UK delivery company Yodel has seen a 132% increase in customer to customer (C2C) parcel volumes since July 2022. It now handles almost 600,000 C2C parcels a week.
According to the carrier, this comes from a strong growth in the number of people selling items online via marketplaces like Vinted and eBay. Recent research by Yodel suggests that 39% of the 19,000 surveyed are looking to online marketplaces for gifts this Christmas, and this may well lead to a surge in C2C volumes this peak season.
Yodel has taken steps to work into the C2C segment in recent years, including print-in-store labels across its large network of out-of-home pick up/drop-off points.
The carrier’s Store to Store and Store to Door services are available to customers sending and receiving parcels up to 10kg in weight.
Mike Hancox, CEO of Yodel, commented: “Much of the growth in volumes we have seen from Yodel Direct has been driven by the growing numbers of people selling online to boost their income. We have also seen micro sellers that began operating during the pandemic continuing to do so since, further driving the success of our C2C deliveries.
“In the coming year, we expect to see greater integration of technology into our services to further improve customer experience. We have appointed a dedicated Out of Home Director to lead on expanding our offering; a key focus for us as we look to provide greater convenience for customers to collect and post their parcels at a time that suits them.”
UK delivery company Evri has become the latest firm to enable customers to pick up and drop off parcels via the Post Office network.
Initially Evri’s customers will be able to pick up and drop off parcels at 50 Post Office locations around the UK before Christmas. If this goes well then this might be rolled out to all 11,500 branches across the UK in time.
Evri joins DPD, DHL Express and Amazon who have allowed customers to pick up and drop off parcels in the network beginning this year. Prior to 2022, only Royal Mail customers could do so.
Nick Read, Post Office’s chief executive said, “Last January we had no carrier partnerships, and we’ve now grown our Click and Collect capabilities fivefold, which is a real testament to the size and reach of the Post Office network and the accessibility it affords consumers.”
Read concluded : “We’re delighted to be working with Evri, an established and successful company, to expand the wide range of parcel services that we can offer customers.
“Last January we had no carrier partnerships, and we’ve now grown our Click and Collect capabilities fivefold, which is a real testament to the size and reach of the Post Office network and the accessibility it affords consumers.”
Martijn De Lange, Evri’s chief executive, said: “Our ParcelShops are key in our commitment to offering consumers both convenience and choice, enabling them to send, return and collect parcels at a time and place that suits them.
“These new locations will complement our existing nationwide network of 10,000-plus locations and give Post Office customers a new fast, reliable and cost-effective way to send and receive their parcels.”
Ahead of Royal Mail’s financial results announcement today (Thursday 17th November) the Communications Workers Union has called on the government to launch an enquiry into what the CWU says has been gross mismanagement by the postal operator’s board of directors.
In a statement passed around CWU members, the union argues: “The truth is, the Royal Mail Group CEO and Board have not acted with integrity and transparency in their dealings with the union since the beginning of this year and they have made huge mistakes along the way which have led directly to them announcing 10,000 job losses – something we simply cannot accept. This amounts to gross mismanagement.”
The CWU points out that the Royal Mail board cannot explain why they walked away from the Pathway to Change agreement between the union and the employer. The CWU say this “was a self- inflicted wound which delayed the opportunity for true modernisation.”
At the same time, the CWU points out the board will not explain why it handed over £567 million in dividends to shareholders rather than supporting its own staff with effective pay rises.
The CWU accuses Royal Mail management of not explaining why they refused an offer by the union to escalate negotiations and meet with them, instead, escalating the industrial dispute by making unagreed changes.
Core to the business, the CWU hasn’t had an explanation for the change of Group name to International Distribution Services. At the same time the Group is widely held to be planning the sale of its international arm GLS, and planning to reduce its Universal Service Obligation (USO) of mail delivery six days a week.
The CWU claims that these issues are down to ‘power struggles’ in the board: “We believe these reckless decisions have been driven by Boardroom power struggles, in the full knowledge that the company has been facing a potential takeover for some time.”
The union continued, “This is backed up by the fact the government has now given clearance to the private equity firm VESA to increase their shareholding. A takeover bid could be imminent and there has been a recent sharp increase in share value, which means someone is clearly buying them.”
Given the situation, the union believes the board incapable of resolving the very large problems the postal and parcel operator faces. The statement concluded, “As things currently stand, we believe the senior managers who led us into this crisis do not have the ability or the right to lead us out of it. This is why we now call on the government to immediately launch an enquiry into the actions of the CEO and Royal Mail Group Board.”
The Alternative Parcels Company (The APC) has seen a 30% decrease in profits this financial year compared to 2020/21.
The APC’s profit before tax was £6.41 million, a fall that the parcel network attributed to three factors:
Post-pandemic consumer buying trends. The effects of the COVID pandemic significantly affected the previous year’s record results, with parcel volumes surging and demand for delivery services at an all time high.
Inflation and rising costs. Fuel, energy and labour costs impacted the company’s bottom line, and impacted consumer confidence.
Business investment in employees and depot infrastructure. The APC invested heavily in its workforce and infrastructure, rewarding its staff with pay rises and developing new physical infrastructure.
Commenting on the financial results, Jonathan Smith, Chief Executive at The APC, said: “This year we have been extremely considered about how we can best support our people, depots and customers through such unprecedented times. As a business we’ve absorbed a significant amount of inflationary cost to protect our customers from the ongoing economic turbulence, and our agility as a business has allowed us to re-shape and respond to their needs quickly during times of change. We have also continued to invest heavily in our workforce, the heart of our business, to ensure they feel recognised for their important contribution and benefit from the long-term career opportunities available to them.”
One of the major investments has been in adding new staff to its workforce, and The APC has recruited a lot of new staff – many of whom have been under 30 years old.
Smith continued, “There is no doubt that the outlook remains uncertain. But as a business we remain committed to building for future growth, and the growth of our customers. As we go into 2022-23 we’re already making plans that allow us to continue investing in our network and our people, and further strengthen our position in the market.
“We’re well placed to navigate the continued evolution of our industry. Demand for APC licences remains high and the passion, pride and entrepreneurialism that comes from our people and network ensures our customers will continue to be served well.”
DPD UK has confirmed it has participated in the Design Verification programme of the Volta Zero 16 tonne electric delivery truck.
The Design Verification Volta Zero was based at the Hinckley Superhub in Leicestershire. DPD UK drivers were accompanies by Volta Trucks engineers as well as qualified drivers. No parcels were carried in the test programme but the vehicle was tested on a range of routes that included motorways, A-roads and urban centres.
The Volta Zero is the world’s first purpose built 16-tonne vehicle designed for urban logistics. It has a range of 150-200kms and is designed to reduce the environmental impact of freight deliveries in city centres.
From DPD UK’s perspective, this fits with its aim to be the most sustainable delivery company in the UK. It plans to have more than 3,000 electric vehicles on the road this year and another thousand by the end of 2023.
Olly Craughan, Head of Sustainability, DPD commented, “It was fantastic to get our hands on a Volta Zero and put it through its paces, with our own drivers alongside Volta Trucks’ engineers. We had the truck for five days and it is very impressive. The trial is an opportunity for us to test the vehicle first-hand, while helping Volta Trucks see exactly how it performs in real-life scenarios and on typical routes.
“Working with the Volta Trucks team in the cab gave us a great insight into what they are doing and how the truck could fit into the fleet. Increasingly we are operating in low or zero-emission zones in major cities, so with micro-depots and all-electric city centre van fleets we have already transformed our urban delivery strategy. But there is a real need for bigger, green vehicles that can fit into that strategy.”
Irish An Post customers in Galway can now collect their parcels that could not be otherwise delivered when they were in.
Parcel recipients will be able to collect their parcels from one of 12 An Post post offices. The parcel delivery person will leave a ‘docket in box’ (DIB) slip for the customer to tell them where to collect the parcel.
Prior to this new offering, Galway customers had to collect their parcels from a city delivery service unit, which often involved several miles of travel each way. This new offering will reduce their travel time and allow the postal operator to reduce the amount of carbon emitted per parcel delivery.
Hildegarde Naughton, Ireland’s Minister of State at the Irish Government Department of Transport, said, “This is a very welcome development for Galway and demonstrates once again the importance of a high-value and high-quality post-office network to people across the county, as well as the central and trusted role of postmasters in our communities. I am sure this news will be greeted with open arms by those receiving important mail and parcels through An Post as we now eliminate an unnecessary journey across our bustling city of Galway for families and businesses. This funding will help bring greater sustainability and certainty for postmasters in County Galway, allowing them time to take advantage of the opportunities e-commerce can bring and to grow their business.”