The cost of Covid-19

In the latest RMtv programme, we look at the financial challenges presented by Covid-19 for Royal Mail, our postal peers and other industries.

Parcel volumes have mirrored Peak levels since the coronavirus pandemic brought the UK into lockdown and sent e-commerce soaring. But more parcels does not necessarily mean more profit for the business. Press play to hear why.

We delivered 550 million fewer addressed letters year on year in the first two months of this year. At the same time, we delivered around 80 million more parcels. But being busy and profitable are not always the same thing.

Jon Nicholson, sales director, parcels, said: ‘Our top line is moving up, but so is our bottom line. That gap stays the same. In letters, which are more profitable, we’ll have to put an awful lot more volume through the network or process them a lot more efficiently than we’re currently doing to address that balance.

‘Bigger parcels definitely mean more revenue for us, so we always charge appropriately for the size of the parcels. Our contract, particularly with our business customers, allow us to do that. But of course, what bigger parcels also mean is more cost, more yorks, more vans, more processing time, more floor space and so on.

‘So, with that increased size, yes, we get the increased revenue, but our costs go up by an equivalent amount.’

The programme is now live across our channels. This includes Content on Demand for those safe and able to watch on that channel, socially distanced.