Ofcom issues annual postal market monitoring update

Ofcom issues annual postal market monitoring update

Ofcom has today (30 November) issued its annual monitoring update on the postal market. Ofcom’s research indicates that “the majority of consumers are satisfied with postal services (85%) and that prices remain affordable”, but it also notes that Royal Mail’s 2015-16 quality of service (QoS) performance was lower than in the prior year on six of the eight measures. Going into more detail on Royal Mail’s performance, the Ofcom report noted: “It [Royal Mail] failed to meet its First Class, Postcode Area (PCA), delivery routes completed and Special Delivery QoS targets.

“We take Royal Mail’s QoS performance seriously (as one of the three key safeguards within the regulatory framework) so we opened an investigation regarding the failure to meet the First Class and PCA targets.

“On 20 October 2016, we concluded that although Royal Mail had contravened Designated Universal Service Provider condition 1.9.1 by failing to meet minimum QoS standards, we would not impose a financial penalty on this occasion.

“Royal Mail missed the relevant standards by relatively small margins and had taken steps to address the breach.

“However, we expect Royal Mail to ensure it meets QoS requirements going forward. If it breaches the condition again, we may consider the imposition of a significant financial penalty on Royal Mail.”

The report also noted that the volume of addressed letters continued to fall in 2015-16. Parcel volumes increased by 12% but revenue only grew by 8% and Ofcom noted that the average unit revenue fell for both domestic and international inbound parcels.

For its report on the UK parcels sector, Ofcom collected information from APC, Amazon Logistics, DHL, DPD, DX, FedEx, Hermes, Royal Mail (including Parcelforce Worldwide), TNT, Tuffnells, UK Mail, UPS and Yodel. It did not collect information from operators who offer only same-day delivery services.

This list includes two significant additions to last year’s contributors, as Ofcom noted: “In our previous monitoring update, we noted that we had not collected information from DHL, who had sought judicial review of our information request. We also noted that we had not collected information from Amazon about its Amazon Logistics services. We have now collected information from these operators.”

Amazon’s inclusion was important – as Ofcom noted: “One of the most significant developments in the parcels sector in recent years is Amazon’s decision to bring some of its own deliveries in-house, given its large and growing scale.”

The report also noted the growth in Click&Collect services and “alternative access points” such as parcel shops and lockers.


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