Industry outlook

The covid-19 pandemic has had a growing impact on the global economy. In its latest assessment, the Organisation for Economic Co-operation and Development (OECD) has warned that the UK is likely to be the hardest hit by coronavirus among all the major economies.

The OECD has said that Britain’s economy is likely to slump by 11.5 per cent in 2020, just overtaking Germany, France, Spain and Italy. The Bank of England has forecast the UK economy will contract by an historic 30 per cent in the first half of 2020.

Driven by online shopping, UK parcel volumes are up 31 per cent, but UK-addressed letter volumes are down 33 per cent (308 million items). Revenue has fallen 23 per cent. Overall, UK revenue was down £22m in our April trading period alone.

‘The financial contribution from parcels is not the same as letters, which are in steep decline,’ said strategic insight manager, Val Walker. ‘We estimate for every one per cent of letter volume decline, we have to grow parcel volumes by over two per cent just to stand still.’

Marketing mail, which accounts for £1 in every £7 we earn from letters, has fallen considerably. The money we make in parcels is not making up for the falling letter volumes.

‘I appreciate colleagues will feel they are exceptionally busy with parcels, but the underlying impact of letter decline in our network is a significant impact on the business and something we need to continue to review’, said national service delivery director, Ricky McAulay.

‘We need to look at costs now, but importantly coming out of this pandemic, we need to see if we can accelerate our strategy.’

Find out more in the next edition of Courier – landing at homes soon.