Royal Mail sees busiest quarter ever as Christmas shopping shifted online during lockdown – and says it’s too soon to draw conclusions about the effect of Brexit on its international business

Picture caption: Royal Mail launched its first drone delivery in December

Picture caption: Royal Mail launched its first drone delivery in December

The Royal Mail has seen its busiest quarter ever as shoppers bought online during locked down peak trading. But it says it’s too soon to say what the impact of EU agreement will be on international post and parcels. 

The delivery business says it has had the busiest period in its history, after a Christmas quarter in which it handled 496m parcels. Fast growth in online shopping meant that on its busiest day it delivered 11.7m parcels – 32% more than its busiest day during the first national lockdown, with online shopping. The quarter included both Black Friday, Christmas and second Covid-19 lockdowns during November.  

So far in its current quarter, the company says it has seen a reduction in its international business following the new trade agreement with the EU – but that it’s too soon to say what the longer-term impact will be. 

It now expects to make an adjusted group operating profit of more than £500m during the 2020/2021 full year. 

But the company says that high levels of demand combined with growing levels of Covid-19 related absence meant that the quality of its service suffered. It has responded by keeping on about 10,000 of its temporary workers, 6,000 of its extra vehicles, and four temporary Parcel Sort Centres from the Christmas peak. 

Royal Mail non-executive chair Keith Williams, says: “The third quarter saw unprecedented parcel volumes in Royal Mail, driven by online shopping and the peak Christmas period, with 496m parcels handled, the busiest in our company’s long history.”

He adds: “Given these record volumes, we recognise that at times our service during the period was not always as we would have wishes. But thanks to the efforts of our team, the retention of around 10,000 of the 33,000 flexible workers from the Christmas peak, and the introduction of new processes, we have been making encouraging progress. We are resolutely focused on delivering a comprehensive service despite the challenging circumstances.

In the third quarter of its financial year alone – to December 27 2020 – group revenue rose by 20%, including a 16.5% rise in Royal Mail revenue. Parcel volumes were 30% up and parcel revenues up by 43.3%. Sales of tracked  24-hour and 48-hour parcel delivery and tracked returns – Royal Mail’s key ecommerce products – grew by 73%.  But letter volumes were down by 14% – although that is an improvement from a 33% decline at the beginning of the financial year. 

In the first nine months of the financial year, group revenue was 13.5% up at £9.3bn, with Royal Mail revenue 9.3% up at £6.4bn. It delivered 1.3bn parcels over the period, and revenues rose by 37% to £3.8bn. 

Effect of Brexit 

Beyond the third quarter, Royal Mail says the new requirement for customs forms and/or taxes and duties to be paid for imports and exports to and from the European Union is having an early effect, with “a reduction in international volumes broadly as expected”. It also saw an impact when the sea border with France was temporarily closed in December amid concerns about the UK variant of Covid-19. “However,” it says, “given it is only one month since the agreement with the EU came into effect, the future trend is still somewhat unclear”. 

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