Royal Mail revenue boosted by strong Christmas performance
Royal Mail has announced an improved performance at its parcels business over a busy Christmas period, which helped overall group revenues grow by one percent and parcel revenue by three in the nine months to 28 December.
The positive news was helped by price promotions, Black Friday, and its own longer business hours in an increasingly competitive market.
Though expanding rivals remain a concern, the competitive nature of the market was highlighted when courier City Link went into administration on Christmas Eve, while others such as Yodel suffered reputational damage after struggling to handle the Black Friday demand spike.
The Royal Mail shares dropped sharply from their post-privatisation peak on concern over a squeeze on parcel prices caused by rising competition, the emergence of a rival letter-delivery service and regulatory disputes, but Thursday's update suggests that restructuring and improvements to its parcels service are improving its fortunes.
Group revenue growth slowed as expected over nine months as opposed to six, but rising parcel volumes and sales gave investors cause for optimism, lifting the shares 4.3 percent to 449 pence after the announcement.
Royal Mail Chief Executive Moya Greene said it was confident of meeting full-year expectations but warned of tough times ahead in parcels delivery, stating overcapacity and too many players will continue to put pressure on prices going forward into 2015 and 2016.
She said: Our postmen and women delivered a great service over the busy festive period. Royal Mail delivered one of its highest ever quality of service performances for parcel delivery to our customers over the month. This is because we started to plan for Christmas in April, putting investment behind extra sorting capacity with 10 temporary hubs and training around 19,000 extra people. As a result, Royal Mail was able to provide customers with reliability, flexibility and high quality delivery at a competitive price.
“As the UK’s biggest parcels carrier we are proud that so many people and businesses the length and breadth of the country trusted us to deliver their Christmas. We handled around 120m parcels in the month of December alone, 4 percent more than last year. Letters performed in line with our expectations, with addressed letter volumes down 3 percent in the first nine months. GLS, our ground-based European parcels business, continues to perform well.”
Greene added: “We are continuing to bear down on costs and expect that underlying operating costs before transformation costs in UKPIL will be flat for the full year. Given our performance over the Christmas period, we are confident that the outcome for the full year will be in line with our expectations.”
The sale of its Paddington site completed as expected on 8 December 2014 with total gross cash proceeds of £111 million being received.
In November Royal Mail said growth in the UK parcels market would fall from 4-5 percent to 1-2 percent for at least two years as key player Amazon delivers more of its own packages and others add capacity to deal with rising online retail demand.
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, going beyond more traditional applications of the technology in single-route movement of goods from A-B. Exponential growth in ecommerce is spurring its broader experimentation in new autonomy solutions, Fed-Ex says, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, Vice President, Advanced Technology and Innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.