Proactive Investors - Royal Mail’s ability to meet its universal service obligation continues to give cause for concern, according to regulator Ofcom.
Alongside a survey about the performance of parcel delivery firms in the UK, Ofcom noted that Royal Mail’s parcel volumes declined and it lost parcel market share last year.
Revenues also fell and profit margin declined significantly, added the regulator.
“We continue to have concerns about Royal Mail’s ability to deliver sufficient efficiency savings, and, given recent performance and these risks and uncertainties, our concerns about the longer-term sustainability of the universal service have further increased since last year.
“Royal Mail’s quality of service performance performance continues to be well below target: this is having a significant negative impact on mail users, with delays being experienced across the UK.
“We are concerned that Royal Mail’s performance has not shown any signs of improvement in recent months and are disappointed that it has been unable to provide us with a timeline for when its performance will improve. We will continue to hold Royal Mail (LON:IDSI) to account for these issues, taking further enforcement action if necessary.”
Ofcom added it is also gathering evidence over whether universal service, where Royal Mail has to guarantee delivery to set deadlines, needs to 'evolve'.
An analysis of the evidence will be published early next year, Ofcom said, though it added it would be the government and Parliament that determine what changes are made
Even though Royal Mail was beset by strikes and losses last year, its performance was still mid-table and better (see image) than each of DPD, Yodel and Evri (the old Hermes), which was bottom both for satisfaction (26%) and unsatisfaction (46%).
Eight in 10 parcel recipients (78%) were satisfied by deliveries from parcel firms on average, though two-thirds (65%) have had a delivery issue in the previous six months.
The most common complaints are about delivery delays, parcels being left in an inappropriate location, not being given sufficient time to answer the door or the delivery driver not knocking loudly enough, sid Ofcom.
FedEx (NYSE:FDX) came out best in the poll at 58% satisfaction with 17% of customers unhappy, followed by Amazon (NASDAQ:AMZN) (56+ and 16% minus), DHL, UPS and ParcelForce.
Royal Mail was next scoring +46% and minus 24%.
Shares in International Distribution Services, which owns Royal Mail, fell 1% to 243.7p.
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