Decline in letter mails, but increase in parcel deliveriesThe total number of addressed letters delivered in the United Kingdom (UK) has experienced a huge decline in recent years, primarily due to many businesses pushing clients to use online services, particularly during the COVID-19 pandemic lockdown. The most recent figure for the FY 2021-22 showed that the letter volume sent nationwide increased slightly by three percent year-over-year to almost eight billion. However, that number is about a third less than five years ago. Translated into income, that represents Royal Mail lost around 600 million GBP a year. In an effort to connect letters to the digital world, the company has creatively added barcodes to stamps to enable users to read messages or watch videos.
The COVID-19 pandemic lockdown has caused a surge in online commercial activities in the UK. As a result, Royal Mail’s parcel demand hit an unprecedented peak of 1.7 billion in the FY 2020-21. Revenues earned by the company’s parcel delivery services jumped to more than 5.1 billion GBP that year. With the easing lockdown in late 2021, the company saw a decline in the number of parcels handled in the FY 2021-22. However, rising demand for parcel shipments in the UK is expected to grow in the next three years since digital buyer penetration is forecasted to reach approximately 90 percent of the British population by 2025. Growing demand for package delivery has prompted the company's leaders to consider the deployment of more robots to improve efficiency.
Commitment to net-zero emissions by 2040After including three scope emissions from all value chains, Royal Mail in the UK emitted about 1.2 million metric tons of carbon dioxide during the FY 2021-22. Under the Science-Based Target initiative, the Group has pledged to a goal of net-zero emission by 2040 through reducing emissions from deliveries, operations, and the supply chain. The net-zero plan includes a long-term aim to decarbonize the emissions of deliveries, i.e., 50g CO2e emission per parcel in the UK by 2040. Meanwhile, of the international GLS group, GLS Germany and GLS Netherlands are the two national companies that already ship packages in a climate-neutral mode.
In addition to this, Royal Mail Group is also reducing its carbon footprint through digital tools for on-time delivery and route optimization. Improving the fuel efficiency of the fleet is also a key step for the Group to meet its carbon reduction targets. In FY 2021-22, the number of electric vans increased to about 1,600 units and is estimated to reach 5,500 by 2023. Moreover, the Group is also expanding the transport vehicles powered by alternative fuels such as hydrogen in their fleet. GLS Germany currently offers emission-free deliveries in six cities.