Royal Mail to simplify consumer parcel services from April 2013

Royal Mail today unveiled plans to simplify its line-up of domestic parcel services for consumers, small businesses and franking customers. The company said it will cut the current range of 15 weight bands by more than half, to a new system based on seven weight bands.

Two new “broad” parcel categories – small parcels and medium parcels – will be introduced, with the “packet” format phased out. And, customers will be able to send parcels between 1kg and 20kg in weight by Second Class, rather than having to resort to First Class for such items.

The changes are subject to a public consultation beginning today, and are scheduled to take force as of 1st April, 2013.

The streamlined parcels portfolio comes as part of Royal Mail’s efforts to update its services as it faces more demand for shipping parcels, and less demand for delivering letters. Parcels now account for 47% of the Group’s revenue, with volumes growing rapidly, not least because of the popularity of shopping online.

Royal Mail said its non-contract parcel services have remained unchanged for several years, but a review has suggested the need for change.

“We will invest extensively to make it easy for customers to understand our new formats and our revised pricing structure,” the company promised in its consultation, adding that templates would be available in all post offices to help customers, and Post Office staff fully trained in advising customers.

Changes

Consumer research has suggested customers were “often confused” by the current product range, and the 23 different prices available depending on weight and service.

As a result, Royal Mail said its changes should make parcel services easier for consumers to understand, and improve choice.

• The small parcels service will have a maximum weight of 2kg and a maximum size of 450mm by 350mm by 80mm. This is likely to be around 71% of all parcel items handled by Royal Mail.
• The medium parcels service will have a maximum weight of 20kg, and maximum dimensions of 610mm by 460mm by 460mm.
• Both small and medium parcels will be available on either First Class (next day) or Second Class (three-day) services. This means the weight limit on Second Class parcels will increase to 20kg. Weight bands will be simplified from 15 into seven bands.
• The standard parcels service is being withdrawn.
• The proof of delivery option “Recorded Signed For” will be renamed “Royal Mail Signed For”, available on First Class or Second Class.
• The registered and insured option, “Special Delivery Next Day”, will be renamed “Royal Mail Special Delivery Guaranteed by 1pm”, with a maximum weight limit increased from 10kg to 20kg.
• Items larger than the medium parcels limits (except cylindrical or roll-shaped items) will no longer be delivered by Royal Mail, with customers offered the services of the Group’s express parcels business, Parcelforce Worldwide.

Commenting on its move to charge parcels based on size as well as weight, Royal Mail said it would bring its pricing more in line with other postal operators, including those in Germany and Italy.

“As the parcels market grows, we need to ensure we reflect the cost impact that size has in relation to handling and delivering parcels,” it said, “to ensure all Royal Mail’s services make a reasonable amount of return, and so ensure the sustainability of the universal service.”

Royal Mail suggested that it believes changes to the packaging of around 26% of parcels that would currently be Medium Parcels would see them become Small Parcels.

Compensation

Royal Mail’s Recorded Signed For service for parcels will have its liability limit increased, with the company intending to raise the maximum compensation payable for loss of damage of a Recorded Signed For item from GBP 46 to GBP 50.

However, for untracked First Class and Second Class parcel services, the compensation limit will be lowered from GBP 46 to GBP 20, encouraging customers to use the premium priced service for higher value packages.

Royal Mail argued that many postal operators in other countries do not offer any compensation for loss or damage of untraced items, including Germany, the Netherlands and the United States.

“The changes will ensure that Royal Mail provides proportionate and reasonable compensation based on the service used and postage paid,” the company said today in a statement.

Royal Mail said it would continue to pay compensation for delayed items, with limits unchanged.

The public consultation on the proposed changes to the parcel services runs until 11th January, 2013.