Today, Royal Mail cited a bitter dispute with postal workers for not being able to meet the annual quality of service targets of the firm.
Ofcom, the postal regulator, said that it was “concerned that Royal Mail has fallen short.” The regulator will now consider whether to impose the firm with fines of up to 10 percent of its “relevant turnover.” In 2017, Royal Mail generated turnover amounting to £7.7bn across all of its letters and parcel operations in the United Kingdom.
The FTSE 100 company was able to deliver 91.6 percent of first-class mail on time – below the target that was set by regulatory Ofcom of 93 percent. Around 98.4 percent of the second-class post was delivered on time, which also missed the minimum requirement of 98.5 percent.
Royal Mail blamed “a very challenging industrial relations environment” as one of the reasons why the firm fell short of the targets that were set by Ofcom. It asked Ofcom to take this and other “exceptional events” into account.
An Ofcom spokesperson stated: “These targets are designed to ensure postal users receive a good, reliable service from Royal Mail. We are concerned that Royal Mail has fallen short, and have met the company to ask them to explain why. We are now reviewing the results in detail and will then consider further action.”
After over a year of discussion and facing the prospect of a crippling strike action during the Christmas season, Royal Mail agreed a pay and pensions deal earlier in 2018 with the160,000 workforce of the company in the United Kingdom.
Royal Mail also cited “significantly reduced staffing levels caused by the Australian flu outbreak” and “some very severe weather.”
The Christmas season– from the first Monday last December to the first Monday of January – is not included in the quality of service measurements of Royal Mail. “Cyber Week,” the days around Black Friday, fell outside of the said period and Royal Mail said that the associated rise in volumes was also to blame for failing to achieve expectations.
The target miss that was revealed today comes after Royal Mail has released bumper returns to investors. After shares dropped to an all-time low last November – which resulted to the embarrassing demotion of the firm from the blue-chip FTSE 100 index of the United Kingdom – they have surged by over 75 percent to all-time highs.
The operations chief of Royal Mail, Sue Whalley, said that she was “disappointed” about the performance of the firm.
She stated: “Several exceptional events that took a heavy toll on our performance during the year.”
Whalley added: “Royal Mail has one of the highest quality of service specifications of any major European country and our postmen and women work extremely hard to deliver demanding targets.”