Royal Mail is edging towards a truce in its long-running modernisation battle with unions – just as its postal workers are deluged by a surge in parcel deliveries.
Britain’s 504-year-old postal service will this week reveal a boost for its parcels business, GLS, when it posts results for the six months to September 27. The Covid-19 crisis has accelerated a shift away from letters and towards parcels, though these are costlier to deliver.
The City is pencilling in first-half group operating profits of £9million, and Royal Mail is looking forward to handling record volumes over the festive season.
Back on track?: Royal Mail is looking forward to handling record volumes over the festive season
The November lockdown, coupled with Black Friday and customers’ fears of not receiving Christmas gifts in time, has sparked a tidal wave of online shopping.
The parcels boom comes as Royal Mail’s protracted row with unions – over everything from an overhaul of operations and holiday pay to working conditions at the postal monopoly – could be inching towards a close. Sources said meetings this week had been ‘constructive’ and a settlement could be agreed before the end of the year.
It represents a marked change in tone in the dispute. Sources said after the ill-fated reign of former boss Rico Back, who was ousted earlier this year, interim executive chairman Keith Williams had put talks on a sounder footing. Unions have pledged not to take industrial action during the pandemic.
The discussions centre on plans to try out separate daily parcel deliveries; use a clocking in and out system; and ditch old letter-sorting machines, which could reduce staff numbers.
Talks are ongoing with the Communication Workers Union, which represents frontline staff, and Unite, which speaks for managers.
Unions are also understood to be concerned that technology used to track the efficiency of the routes postal workers take could be used to measure their performance. Shop stewards are also pushing to maintain a stipulation preventing compulsory redundancies.
In July, Royal Mail said that 2,000 of its 9,700 managers would have their roles cut, though Williams has said long term the company could end up employing more people if it moves fast enough to adapt to a changing market.
He is attempting to revamp the company as it faces intense competition from couriers and Amazon.
Energy tycoon Daniel Kretinsky, a billionaire investor known as the Czech Sphinx for his inscrutability, has built a 13.1 per cent stake in Royal Mail, sparking speculation he may force a shake-up.
Analysts said the surge in parcels was likely to lead to an upgrade in group profit forecasts for the year. Citigroup analysts argued that, with UK e-commerce sales growing at 35 per cent a year, a crunch in capacity for parcels could force prices up, boding well for Royal Mail. However, its UK arm is still expected to make a loss this year.
Analysts at the financial services firm Jefferies argued that Royal Mail had the lowest productivity levels in the sector, and could be hit by Brexit affecting cross-border trade.
Ministers and the communications regulator Ofcom are studying Royal Mail’s obligation to deliver post for the same price anywhere in the country.
The shares, up nearly 20 per cent this year, are trading at £2.75, but this is still below their 2013 privatisation price of £3.30.