As some readers will already know, I do
a lot of investing on the UK and USA stock markets. I thought I was pretty good
at choosing stock market ‘winners’, but that can’t be said for my decision (exactly
two years ago this week) to buy shares in Royal Mail, which have fallen an
incredible 49% in value since I bought them in January 2022. Oh well, you win
some, you lose some!
I invested in the company because I thought Royal Mail (now officially known as International Distributions Services PLC) was a company
heading for success. How wrong I was!
The company’s share value has plummeted
in the last two years, and so has their reputation with the British public. So
much so, that in Spring last year, Ofcom launched an investigation into its
terrible delivery record.
The service delivered only 73.7% of First
Class mail within a day (far short of the 93% target). In addition, only 90.7%
of second class mail was delivered within three days (the target is 98.5%). Ofcom
said the impact of Covid was no longer "an excuse for poor delivery
performance" and launched a full investigation into the causes of this
poor performance.
Although it received little media
attention, Ofcom published its report into Royal Mail just before Christmas,
and it was not good for Royal Mail.
What did the Ofcom Report Say?
Ofcom fined Royal Mail £5.6 million
for failing to meet its First and Second Class delivery targets in the 2022/23
financial year.
Under Ofcom’s rules, each year Royal
Mail is required to deliver 93% of First Class mail within one working day and
98.5% of Second Class mail within three working days. In 2022/23, Royal Mail’s
reported performance results showed that it had only delivered 73.7% of First
Class mail on time and 90.7% of Second Class mail on time.
This means that Royal Mail breached
its obligations by failing to meet its targets by a significant and unexplained
margin. This caused considerable harm to customers, and Royal Mail took
insufficient steps to try and prevent this failure.
Therefore Ofcom imposed a fine of
£5,600,000 on Royal Mail. The penalty included a 30% reduction from the penalty
they would otherwise have imposed, toreflect Royal Mail’s admissions of
liability and its agreement to settle the case. The financial penalty is
payable to HM Treasury within two months.
Ian Strawhorne, Ofcom Director of Enforcement
said: “The company’s let consumers down, and the fine should act as a wake-up
call - it must take its responsibilitiesmore seriously. We’ll continue to hold
Royal Mail to account to make sure it improves service levels.”
He continued: “We are concerned that
Royal Mail appears to have insufficient control, visibility and oversight over
local decision-making at certain delivery offices where high absence and
vacancies may have led to customer operations managers - who are responsible for
individual delivery offices - making “on the day” decisions about what to
deliver.”
“Given ongoing high absence and
vacancies, and delays in bringing service levels back up, we are concerned
about the operation of delivery offices, which we view as fundamental to Royal
Mail meeting its delivery targets.”
“Royal Mail must ensure its customer
operations managers are provided with appropriate training, so they are
equipped to make such decisions. We will be keeping a close eye on the
company’s performance this year, and the steps it is taking to return delivery
offices to pre-Covid practices.”
What is the view of The Customer Service Blog?
As for me? Well I certainly won’t be
buying any more shares in this shoddy company! And the British public are now
becoming thoroughly fed up with the poor service they receive from our once
great national postal service, not to mention the extortionate price of postage
stamps.
Royal Mail has recently lost its
360-year-old monopoly on delivering parcels from Post Office branches, after
concerns about the poor quality of service led to deals being signed with
rivals Evri and DPD in the run-up to Christmas.
But what about the delivery of letters?
Perhaps it’s time for the government to step in and either renationalise Royal
Mail, or allow other private companies to take over the delivery of letters
instead. When the public are paying so much money for letter delivery these days, the
least they can expect is that their letters actually arrive on time!
© 2023 Darren Bugg