Postal Operators - A Global Decline In Mail Volume
23 March 2008 - Mark White
So why are we closing post offices and why are mail volumes falling - in real terms? A decline in the letters market is being felt globally, not just in the UK - even the US postal service is feeling the pinch.
There are many reasons why mail volume is seeing a slump, but the biggest contributor to this downturn is undoubtedly our obsession with technology. Up until the 1970s, technology had moved along at a relatively graceful pace, but the advent of the transistor and silicon chip, brought a whole new wave of electronics that we could only marvel at. The PC and the internet came much later, but as a point to point communication tool, it has been difficult for more traditional services like the postal industry, to compete with the internet. Technology is now moving so fast, whatever we buy today is quickly outmoded the following day, making it extemely difficult (at times) to know what to buy. The same rules must apply to postal operators trying to decide which equipment to invest in.
In comparison to the 50s and 60s when the greatest leap was the emergence of 'coloured' toilet paper (I kid you not), we are now living in an age when we are no longer able to keep up with each new invention. Personally, at least when it comes to mobile phones, the criteria will be how long it runs between charges and whether or not I can actually read the damned display, but most people seem to change their phones every few weeks.
The Royal Mail, in comparision to Germany, is vastly behind the times. The monopoly that Royal Mail has enjoyed, to a large extent slowed down any need to invest heavily in new technology. Heck, the mail got there didn't it? The problem is, even some of Royal Mail's smaller rivals have sorting equipment that belts along at lightning speed, and even allowing for breakdowns, much of this equipment goes a long way towards slashing the biggest cost to postal operators - the wage bill.
Swiss Post has it's own bus service. DHL, which is probably the most impressive postal and logistics operation, has its own tankers for goodness sake. That coupled with an impressive technological approach by it's grand master, Deutsche Post, including standalone parcel pick-up points and stamp dispensers that can talk to you in several languages, Royal Mail starts to look posiively 'quaint'.
For a workforce used to little change, and a working environment that bore little resemblance to most industries in the private sector, suddenly finding themselves being shoehorned into a more accountable and leaner business hasn't gone down well. To a large extent, the union and the workforce called all the shots. This rapid erosion of power, and the realisation that things will change beyond recognition, isn't that far removed from the introduction of machinery in the textile industy, reason perhaps why postal workers are so often compared to or described as 'luddites'.
Allan Leighton's legendary 'pink shirt' video, which was an in-house attempt to explain to workers why their working conditions had to change, was unsuprisingly, treated with disgust by the more militant element of the workforce. But, whether palatable or not, Leighton's message was quite clear - with Postal Liberalisation already nodded through, Royal Mail had to change, and change drastically. It's competitors were far more efficient and had already moved in on Royal Mail's key business. Some of the contracts lost last year (of which there were many) ran into millons of pounds.
The union (the CWU) seemed to be under the impression that part of the £1.7bn loaned to Royal Mail to bring in new equipment and help plug the pension deficit, should have gone towards elevating the pay of workers, but from a purely commercial viewpoint, it was a short-sighted assumption. Royal Mail was not in good enough shape to even match the technolgical advances in mail sorting, let alone the work ethic. As for their call to bring the level of wage packets above that of those it was competing with - their logic did not prevail.
I recently started rewatching episodes of 'On The Buses' (Reg Varney) which was very reflective of its time, but notable was the slightest excuse to down-tools or call a union meeting if bangers and mash wasn't available in the depot canteen. Unreal? Sadly not. This was the 70s, when unions were able to bring the country to a complete standstill on virtually a whim - I confess I still remember power cuts and three-day weeks.
Since that time, Royal Mail has barely changed internally, but the rest of the world has. In fact Royal Mail is probably the only UK industry that has been virtually immune to the dog-eat-dog world of trying to remain in business. It has had no contenders and been protected by rigorous legislation. On the outside, not only has technology changed, so has our involvement with Europe. I won't dwell on the politics of our connection with the EU, but undoubtedly much of the decision making we now attribute to the British government is in fact made within the European Parliament.
In the last ten years or so, our grasp of the internet and the roll-out of broadband has transformed the way we all communicate. It is faster to send letters and invoices via email and we can buy virtually anything online now. Our reliance on a postal service is a shadow of what it once was. Even the regard we have for the humble postie has been diminished by a world where everything can happen in an instant - and we expect it to. We no longer see the role of posties as the backbone to a vital communication system, a harsh reminder during the postal strikes of 2007.
Post Offices have felt the brunt of this change. Many see little more than a handful of customers a week but most of us are really not comfortable with closures. With the emphasis on out-of-town shopping, the post office was at least a local service we could depend on, and we resent their removal. The trouble is, we're not using them enough, and that coupled with the removal of important services like road tax, tv licences, by stealth, has left many as little more than places to take parcels. Faced with national losses of some £4m a week, clearly many had to go.
The decision as to which were to close, couldn't be based on which were actually profitable since many areas had so many unprofitable ones, it would have meant whole towns and cities without one. That resulted in a target criteria of 2,500 being set with a consultation process that would enable Post Office Ltd to verify that the the decisions were correct - not a means to enable locals to object - although some have been succesful.
The recent debate in the commons made it clear that whilst there was real resitance to closures from both sides of the house, few if any had any proposal that could actually challenge the present plan. If there is any criticism one could make, its the centralised approach that was adopted and the obvious flaws in the consultation process. The electorate despise decisions made on this scale that don't involve genuine local dialogue and the consultation process (even by a Hutton's own admission) is not about stopping closures but about ensuring they are closing the right ones.
Just how much our involvement in Iraq and the cost of so doing has contributed to the UK's debt and prompted rapid closures is not clear, but the cost of engaging in such an offensive has cost us dearly. There are also those who say our involvement in the EU has cost us even more.
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