Households and businesses are facing a ‘big squeeze’. Inflation is at its highest rate for 30 years, as fuel, energy, food and consumer goods prices continue to rise. Businesses hoping to generate growth after several years of uncertainty must look for ways to save, reduce their operating costs and free up cashflow, but they continue to face challenges. As of April 4th, new prices for Royal Mail products and services have come into force. Businesses sending letters and parcels need to stay on top of these changes or risk surcharges if items are incorrectly priced. But there’s good news: some of Royal Mail’s prices are decreasing, including several costs for parcels over 2kg.
What’s changing?
Stamps
First class stamps are rising 10p to 95p, while second class stamps will rise from 66p to 68p. Remember that new barcoded stamps are being rolled out, and while you can swap your older style stamps using the Stamp Swap Out scheme, you won’t be able to use them on your mail or parcels after 31st January 2023 without paying a fee.
Parcels
Some parcel services – generally those above 2Kg – have decreased in price, as Royal Mail has become more competitive for parcel sending. A stamped, Medium First Class parcel weighing 2kg will cost you £6.95. Last year it would have cost you more than £9. Some smaller, lighter parcels could cost more to send now than they did last year: a stamped, Small First Class parcel of 1Kg or below will cost you £4.45, 60p more than 2021’s figures.
International charges
International tracking and signature services will cost less. Temporary air carrier supplements are being removed for most destinations, other than some services to China, Iceland, Israel and Russia, while the International surcharge will be reduced from 6.5 per cent to 4 per cent.
Why are we seeing price changes?
The prices reflect changes in what we’re sending – more parcels and fewer letters, for example, which requires investments in different management skills, processes and technologies. The UK has one of the highest parcel volumes per capita in the world: the Pitney Bowes Parcel Shipping Index found that on average, 74 parcels are shipped per person in the UK, the highest of all 13 major markets in the Index. 5 billion parcels are generated in the UK each year – that’s 160 parcels every second, or around 14 million each day. Prior to the pandemic, volume grew by an average of 8 per cent. In 2020 the growth rate more than quadrupled from the previous year, from 7 per cent y-o-y growth in 2019 to 33 per cent in 2020. Our analysts’ forecasts expect UK parcel volume to exceed 7.5 billion in 2025.
As IT Director for Royal Mail Operations, Pooja Bagga puts it in an interview with technology magazine The Stack, “We’re moving from being a letters company that also delivers parcels, to a parcels company that also delivers letters. From a tech perspective, this means we need to enable process change along with digitising our business. We need [even better] pipeline and supply chain visibility; we need to support and deliver major projects like the commissioning of the two new parcel hubs containing fully automated parcel sortation machinery, giving our workforce the right digital tools to increase efficiency, to enabling more data-driven decision making across our entire network”.
The changes will also help Royal Mail remain competitive while delivering its universal service obligation. Costs of delivery are rising, and the business is facing labour shortages and fuel increases.
Under the universal service obligation, Royal Mail is required by law to provide a universal postal service including delivery and collection, from Monday to Saturday. It delivers to 31 million addresses in the UK. Like other parcel operators, the company will need to invest in improving its customer experience. Regulator Ofcom has called on parcel operators to make their customer complaints process simpler and more transparent.
How can my business save money on sending?
Online postage
Buying postage online via Royal Mail Click & Drop can offer you discounts compared to buying stamps over-the-counter. You need to set up a Click & Drop account, buy your postage online, print and attach it to what you’re sending, then drop it in one of Royal Mail’s 14,000 drop off locations around the UK.
Franking machines
Today’s next-generation sending technologies use APIs, the Cloud and the IOT to make sending easy, cost-efficient and remove complexity for businesses. Businesses using franking machines rather than stamped mail benefit from substantial price advantages. For example, if you’re sending a First Class Medium parcel weighing 5-10kg using a franking machine, you’ll now pay £6.95. Before the price change you’d have paid £21.90, so that’s a saving of more than 68 per cent. It’s worth noting that this franking machine rate is a pound cheaper than stamps.
Mailmark technology
Franking machines that are Mailmark compliant benefit from even better savings: Royal Mail Mailmark is a barcode technology, in which the old style frank is replaced with a 2D barcode integrating optical and digital technology. This allows improved tracking and analytics, so businesses can stay fully informed of the status of their mail at all times. Mailmark guarantees businesses pay the correct tariff, removing the risk of surcharges, and importantly, postage costs are always lower with Mailmark.
A point to note is that Royal Mail has committed to phasing out the processing of non-barcoded franked mail. This means that from January 1st, 2023, Royal Mail will not accept mail from customers who use a standard franking machine. This is consistent with the switch to stamps utilising barcode technology: it’s a far better way for Royal Mail to keep track of your post. Your franking machine might already be Mailmark-enabled – check with your provider. You can find more information on the Royal Mail website, along with the latest information on how much your business will be paying to send mail and ship parcels.
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