Table of Contents
Newly elected Royal Mail CEO Emma Gilthorpe has an unenviable task.
Running the UK postal delivery service has proven to be a poisonous chalice. A combination of plummeting mail volumes, six-day-a-week universal delivery requirements and a combative workforce has defeated several predecessors.
It resulted in heavy losses and caused the share price of parent company International Distributions Services to fall sharply.
Modernization has not been helped by the way ‘snail mail’ volumes have plummeted.
The current system is designed to deliver 20 billion letters per day. That number has dropped to 7 billion and the forecast is that it could drop to 4 billion.
New challenges: Coming from Heathrow, with its uncertain ownership, newly elected Royal Mail boss Emma Gilthorpe (pictured) goes from the frying pan to the fire
We’ve all become used to receiving invitations and Christmas cards by email.
Online scams mean the need for impeccable correspondence from HMRC and others is still desirable. The handwritten note still has an allure.
Ofcom, the regulator, has offered some relief from the universal supply obligation. These found favor with Gilthorpe’s interim predecessor Martin Seidenberg, summoned by the top company.
One way forward is to dramatically widen the gap between urgent or premium services and the rest.
At the cost of £1.35 (from yesterday), first class delivery could already be considered excessive. If a six-day ‘urgent’ service has to be maintained, the public will be forced to accept something even more expensive.
The Royal Mail will need to offer certainty of next day delivery and modern Amazon-style tracking.
As for lower-value mail, such as direct marketing and personal notes, a second-class stamp will provide less frequent delivery services, perhaps only three days a week.
That would be better than in Denmark, where postal services have been consigned to the scrap heap.
Coming from Heathrow, with its uncertain ownership, Gilthorpe goes from the frying pan into the fire. Unions and public licensing, it is possible to see a sensible path forward.
Half full
The Tory message is that the economy is turning the corner. Production has recently put a brake on growth.
The service sector, stimulated by the financial sector, the liberal professions and R&D, has boomed. The industry gained strength in March as the purchasing managers’ index moved into growth territory after 20 months in the doldrums.
Lloyds Bank notes that it is great to see manufacturers ‘navigating economic challenges’. Britain is in a better position than the European Union, where manufacturing is moving in the opposite direction.
The electric car revolution and cheaper prices from China are not helping. It may be satisfying for Brexit supporters to see the EU struggling. But we must not forget that the EU countries are our largest trading partner and that the problems on the continent are limiting growth.
An important indicator of improving conditions is the soft recovery in the housing market. The Tory disaster at the polls can be traced back to the Liz Truss experiment, which sent the cost of mortgages soaring.
The picture painted by Nationwide in March is mixed. House prices fell by 0.2 percent, but are still up 1.6 percent year-on-year.
The number of mortgage applications, a good leading indicator, has increased, with 60,383 new loans taken out in February.
Overall, the economy is far from vibrant. But trends in inflation, the housing market and national output suggest that a new Labor government could reap the benefits of growth by simply sitting on its hands.
Soho evenings
New York’s markets could be the flavor of our time for British businesses. Unless the company is a tech superstar like Arm Holdings, a US stock market listing could be a mixed blessing. Soho House’s 2021 exhibition stand in New York as Membership Collective Group turned out to be a disaster.
Shares have halved as GlassHouse research claims it is facing an ‘existential crisis’. Executive Chairman Ron Burkle says his group is “fundamentally profitable.”
The group has 48 clubs in 18 different countries. But it takes a leap to think that start-up clubs in locations like Nashville will ever achieve London’s cachet.
Keeping the group private can provide breathing space to sort out the mess.
