The regulator has imposed a fine of £5.6m on Royal Mail for failing to meet its delivery targets for first- and second-class mail.
According to Ofcom, Royal Mail failed to meet their objectives by a notable and unexplained amount, leading to significant negative impacts on their customers.
In the 2022-23 fiscal year, the company failed to meet its goal of delivering 93% of first-class post on time, with only 74% being delivered within the expected timeframe.
Furthermore, it fell short of its goal for second-class deliveries by only achieving 91% on-time delivery, while aiming for 98.5%. Additionally, its employees only completed 89% of their required delivery routes each day, significantly lower than the expected 99.9%.
The company that owns Royal Mail, International Distributions Services, is publicly traded on the London Stock Exchange’s FTSE 250 index and is primarily owned by investors. Despite its privatization in 2013, the company remains responsible for timely delivery of mail due to previous obligations.
In recent years, Royal Mail has faced difficulties due to a significant decrease in the number of letters being delivered. This issue has been worsened by strained relationships with its employees, leading to multiple strikes during the busiest time of the year in November and December of last year.
Due to the rise in internet-based purchases, especially during the COVID-19 lockdowns, there has been a significant increase in the number of parcels being shipped. However, this industry also faces tough competition. Recently, it lost its 360-year dominance in delivering parcels from Post Office branches, which have been operating separately since 2012.
Ian Strawhorne, Ofcom director of enforcement, said: “Clearly, the pandemic had a significant impact on Royal Mail’s operations in previous years. But we warned the company it could no longer use that as an excuse, and it just hasn’t got things back on track since.
“The company has disappointed consumers, and this fine should serve as a reminder to improve its actions. We will continue to monitor Royal Mail to ensure better service quality.”
Royal Mail contended that certain disruptions were beyond their control, such as strikes during a prolonged disagreement with employees and severe weather conditions. They also mentioned the runway closure at Stansted airport for resurfacing, which resulted in a decrease in the number of permitted flights. Despite these challenges, Ofcom pointed out that first-class and second-class punctuality rates were still only 82% and 95.5%, respectively.
Royal Mail expressed its disappointment with its performance in a statement. The company cited the previous year as being exceptionally difficult, with the ongoing labor dispute significantly affecting the quality of service. This included a total of 18 days of strike action.
The statement emphasized the significance of being on time and stated that measures were being taken to enhance performance, without specifying what those actions were.
After accepting responsibility, the company received a 30% reduction on the fine from Ofcom. The company is given a two-month period to pay the fine to the government’s Treasury.