Ofcom Indicates £650 Million Savings Possible for Royal Mail through Three-Day Service Transition

Royal Mail could potentially achieve savings of £650 million by transitioning to a three-day-a-week letter delivery service, according to Ofcom, the communications regulator. The watchdog’s review suggests that reducing delivery days from six to five could save between £100 million and £200 million, while moving to a three-day service could yield savings ranging from £400 million to £650 million. Ofcom emphasized that it is not proposing specific changes but outlined two primary options for reform: reducing delivery days or extending delivery times for first- and second-class mail, with a next-day service for urgent letters. The review is prompted by a decline in letter volumes and a surge in parcel deliveries due to increased online shopping. Ofcom warns of the potential long-term financial and operational unsustainability of Royal Mail’s current universal service obligation (USO). The regulator aims to initiate a national discussion on the future of universal postal services, seeking public views before finalizing any proposals.