(Alliance News) - International Distributions Services PLC unit Royal Mail on Wednesday proposed a change to its UK letter delivery offering, as it grapples with weaker volumes, in a move which could see "fewer than 1,000 voluntary redundancies".
The measures could trim the net cost of the UK postal universal service operation by GBP300 million per year.
"This is very dependent on how quickly reform is enacted and the rate of letter decline. These savings would allow Royal Mail to continue to invest in the modernisation and transformation of the business to provide products and services that customers want and reduce its environmental impact," IDS said.
Following consultation with customers, businesses and shareholders, Royal Mail proposes to deliver all non-first class letters every other weekday, as letter volumes have fallen sharply over the last two decades.
The company, in a response to Ofcom's call for input into the universal service, said this would make the offering more efficient and financially sustainable.
Royal Mail said the changes would lead to fewer than 1,000 "voluntary" job cuts, adding that it expects no compulsory redundancies.
"In their call for input Ofcom concluded that reform of the Universal Service is necessary, given letter volumes have declined from a peak of 20 billion a year in 2004/5 to seven billion in 2022/3. Volumes will likely drop to around four billion in the next five years," Royal Mail said.
Further, the delivery speed of standard bulk business mail would be aligned to second class, meaning they would arrive within three weekdays instead of currently two.
Royal Mail proposed that tracking will be added to universal service parcels, citing customer demand
IDS Chief Executive Officer Martin Seidenberg said: "If we want to save the Universal Service, we have to change the universal service. Reform gives us a fighting chance and will help us on the path to sustainability. Our proposal is based on listening to thousands of people across the UK to ensure it meets their needs. We have worked hard to come up with a proposal that is good for our customers, good for our people and would allow Royal Mail to invest in products and services that the UK wants."
It will maintain the six day per week first class letter delivery service, in recognition of the "importance of next day and Saturday deliveries, especially for the NHS, publishers and senders of greeting cards".
IDS shares rose 1.9% to 231.00 pence each on Wednesday morning in London.
By Tom Budszus, Alliance News slot editor
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International Distributions Services (IDS)