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Royal Mail parcel trade falls but still beats pre-Covid levels

·2-min read
 (Getty Images)
(Getty Images)

British shoppers are having fewer parcels delivered to their front door as Covid restrictions are relaxed and consumers return to formerly shuttered high street shops, Royal Mail said on Wednesday.

It unveiled a 7% drop in domestic parcel volumes during the three months ended June 30 compared with the same period a year ago.

But Keith Williams, the group’s chair, said he saw early signs that the domestic parcel market had undergone a permanent shift and is “re-basing at a higher level than pre-pandemic, as consumers continue to shop online”.

Although they were down year-on-year, UK parcel volumes were up 35% compared with the same quarter of 2019, offering fresh evidence that e-commerce providers such as Amazon have enjoyed a sustained boost from the pandemic.

Williams said: “For Royal Mail, as expected, parcel volumes decreased and letter volumes increased compared to the exceptional period last year encompassing the UK’s first lockdown, when non-essential retailers closed for the first time.”

He offered a cautious outlook for the business in the months ahead: "As pandemic restrictions continue to ease there is still uncertainty about levels of Covid transmission, the impact on consumer behaviour and economic factors such as GDP growth and inflation, all of which will impact on future performance. We continue to expect fluctuations in volumes as we emerge from Covid restrictions, which we will need to manage accordingly.”

In a trading statement issued ahead of its AGM, Royal Mail said group revenues rose by 12.5% versus the first quarter of 2020-21.

It said it was not issuing any guidance for 2021-22 at this stage, citing “significant short-term uncertainty as we begin to unwind from the impacts of the pandemic”.

Royal Mail also said international volumes were lower than the previous year, blaming “reduced air freight capacity and increased conveyance costs, and the transition to a new trade deal with the EU”.

It added: “As lockdown restrictions progressively ease, we continue to expect month-on-month fluctuations in parcel volumes.”

Ben Nuttall, senior analyst at Third Bridge, said: “Any decline in volumes in parcels has been more than offset by pricing increases, showing lasting benefits for Royal Mail of delivering last year under tough conditions when we all wanted home delivery.”

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