Mail volume decline at Royal Mail could get worse (UK)
Falling mail volume has been blamed for a USD 707m loss in the States by US postal service, the American postal operator, and a similar problem is likely to affect mail volume at Royal Mail this year.
Increased fuel prices, a drop in bulk mail from housing and credit markets have all added to US postal serviceSlosses during its fiscal second quarter, despite cost-cutting measures and efficiency improvements.
Mail volume is decreasing year on year for many postal operators but the present ‘credit crunch’ is likely to hit postal operators across Europe particularly hard as advertisers cut back on expensive mailshots in what is becoming a tough time for economies.
The UK has reported a slow-down in the market for detached homes in the GBP 500,000+ bracket and with new mortgages more difficult to obtain, expenditure on mail-outs in the sector is likely to fall but credit houses which make up a large percentage of bulk and junk mail will see far greater decline.
A rapid drop in mail volume would be bad news for Royal Mail which is already experiencing an annual decline in mail volume of around 2 pct as well as trying to clear the GBP 3.4bn pension deficit over some 17 years. Profits fell by a third last year to GBP 223m through the cost of strike action and contracts lost to competitors.
