The Royal Mail USO – December 2024 Updates

Thank you to everyone who joined us for our first webinar on the Future of the Universal Service Obligation. At Citipost, letters are our specialism. We know that Direct Mail is effective and we are passionate about helping our clients generate a positive ROI from their mail campaigns. We are always on hand to advise them on ways to keep on top of their budgets and schedules in light of changes in the industry.

In recent months, there has been much debate about the future of Royal Mail’s letters network, so we thought it a good time to bring you up to date with progress. Over the past 20 years, the average number of letters that each household receives in a week has fallen from 14 to only 4. On one hand, that means that each letter sent now receives even more attention from the consumer, but it has caused problems for the economics of Royal Mail’s delivery network for letters. This is why Royal Mail has asked OFCOM to agree to

a reduction in the Universal Service Obligation so that they only have to deliver letters every other day, five days a week, as opposed to the current every day, six days a week obligation. Royal Mail’s aim is to release around £300m of cost savings that can be used to sustain their delivery network.

If OFCOM approves Royal Mail’s request to change to an alternate day delivery model, it is anticipated that Royal Mail will improve letter delivery performance
in line with its revised quality of service standards. Additionally, the savings generated could help offset future price increases. OFCOM is currently reviewing this request and plans to publish a provisional decision in early 2025. Following a consultation period, a final decision is expected by summer 2025. Citipost Mail will actively advocate for the best outcomes for our customers throughout this process.

In the meantime, Royal Mail is introducing a new “D+3” Access Service, designed to deliver mail within three days of receipt by Royal Mail. However, this service will operate only five days a week, with Saturday deliveries removed from the schedule. Royal Mail likely aims to encourage customers to transition to this reduced service, which they hope will become the standard following OFCOM’s final decision.

While details remain unclear, we expect Royal Mail to announce provisional pricing before Christmas, with the service launching next summer. For now, the current Standard Access “D+2” service will remain available, although it is expected to be significantly more expensive than the proposed D+3 option when this comes into play. Customers currently using the Economy Service should see little to no impact from these changes.

It remains unclear whether the new HM Government will approve Daniel Křetínský’s takeover bid for Royal Mail. As a result, several uncertainties linger. We will keep you updated on any developments as the situation evolves.

If you would like to speak to us to further understand the proposed changes or explore ways in which you can reduce the cost of your mail campaigns, our industry experts are on hand. Contact us today, or speak to your Business Development Manager, for expert advice and support.