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In the News

Royal Mail under pressure - will it survive intact?

Geoff Riley

18th November 2022

Royal Mail plc, a business that was fully privatised in 2016 is under severe pressure and there might be some takeover activity in the air.

Revenues from letters is falling and this part of the business makes a loss. Parcels are doing much better but the Royal Mail's market share of 27% is under pressure from the likes of DPD and Amazon Logistics. Can the Royal Mail survive in tact?

Royal Mail faces intensive competition from younger competitors that often rely on temporary delivery staff.

Amazon Logistics and DPD are two of their major competitors each with a market share of more than 10 percent of parcels delivered in the UK.

Revenues from letters are declining – we send far fewer letters than in the past.

Revenues from parcels overtook letters in 2021 but growing competition threatens this profitable part of their business.

The Royal Mail posted a first-half adjusted operating loss of £219m, down from a £235m profit in the same period last year.

I recommend this article to read: Royal Mail in crisis: can the service survive the strikes? (Financial Times, November 2022)


The Royal Mail is struggling - for all sorts of reasons, and a good student would be able to identify many of them - and has asked the government if it can stop delivering letters on Saturdays.

You might ask what the point of this is: but it's self-evidently designed to reduce costs, although one wonders what this means for the salaries of postal workers in the longer-term.

Assuming it does reduce costs - how might you use the information in the passage to show how the company might move from loss-making to making a profit again, and might you also think about the shutdown point in this context too.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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