Divisional Update. UK Core Network. Sue Whalley Chief Operations Officer, Letters & Network

Transcription

1 Divisional Update UK Core Network Sue Whalley Chief Operations Officer, Letters & Network

2 Forward looking statements This presentation contains various statements and graphic representations (together, forward looking statements ) that reflect management's current views and projections with respect to future events and financial and operational performance. The words target, objective, growing, scope, platform, future, forecast, expected, estimated, accelerating, expanding, continuing, potential, sustainable and similar expressions or variations on such expressions identify certain of these forward looking statements. Others can be identified from the context in which the statements or graphic representations are made. These forward looking statements, as well as those included in any other material discussed as part of this presentation, involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond Royal Mail's control and which may cause actual results or performance to differ materially from those expressed or implied from such forward looking statements. All statements (including forward looking statements) contained herein are made as of the date of this presentation and Royal Mail disclaims any obligation to update any forward looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements due to the inherent uncertainty therein.

3 Agenda A journey through our network Transformation in recent years Customer Cost Technology Future transformation 2

4 UK core network key highlights Royal Mail handles c.5bn letters and c.bn parcels a year, 6 days a week to around 30m addresses A high call rate, coupled with joint delivery of letters and parcels, allows delivery costs to remain highly competitive, even as letters decline Significant progress made in modernising the network over recent years Improved employee safety and productivity, delivering a high quality of service at reduced cost Ongoing activity to build parcels capability and reduce cost as letters decline We have established a firm foundation on which to drive further improvements in support of our commercial direction 3

5 Our core network handles c.5 billion letters and c. billion parcels a year, delivering to around 30 million addresses, 6 days a week Daily Collections up to 7:30pm Outward Processing normally up to 0:00pm National Logistics Inward Processing normally up to 6:00am up to 3:00pm town / 4:00pm rural Upstream Downstream International Hub International Hub Post Offices c.,500 ¹ Post boxes c.5,000 Collection Hubs c.,00 Work Bundling (Unaddressed Mail) Outward Mail 37 Cross dock at RDCs Inward Mail 38 Local Offices,268 2 HCT and Foot Shared Van Rural Points c.30m Businesses c.76,000 Regional (RDCs) 6 Direct journeys Direct Access Customers Dedicated Business Downstream Access Operators 4 ¹ There are c.,500 Post Offices in the UK, however c.,200 are mobile Post Offices that transfer their mail to static offices for collection. 2 Circa 500 SPDOs (Scale Payment Offices, classed as our smallest & rural Units in the estate) not included; Units excludes Offices co located with Mail and considers multiple Offices on one site as a single Unit

6 Example Posting a First Class letter into a Post Box in Land s End for next day delivery in John O Groats Collection from Post Box by 4:00pm, van journey into local collection hub, then onwards to arrive at Truro Mail Centre by 6:40pm Letter sorted at Truro MC by 8:30pm 2 Lorries and 2 flights overnight via Exeter, EMA and Inverness Letter arrives in Inverness MC at 3.25am and is sorted to DO level by 6.0am The letter arrives in Wick DO by 9:00am and is sorted and delivered to the customer by 4:00pm International Hub International Hub Post boxes c.5,000 Collection Hubs c.,00 Work Bundling (Unaddressed Mail) Outward Mail 37 Cross dock at RDCs Inward Mail 38 Local Offices,268 HCT and Foot Shared Van Rural Points c.30m Regional (RDCs) 6 Direct journeys Direct Access Customers Dedicated Business Downstream Access Operators 5 Circa 500 SPDOs (Scale Payment Offices, classed as our smallest & rural Units in the estate) not included; Units excludes Offices co located with Mail and considers multiple Offices on one site as a single Unit

7 Example 2 Downstream access through our network for next day delivery. Outward Processing Mail arrives into Mail Centre by 2:30pm Mail sorted and despatched to local DO by 6:00am Mail delivered to the customer by 3:00pm urban or by 4:00pm rural International Hub International Hub Collection Hubs c.,00 Work Bundling (Unaddressed Mail) Outward Mail 37 Cross dock at RDCs Inward Mail 38 Local Offices,268 HCT and Foot Shared Van Rural Points c.30m Regional (RDCs) 6 Direct journeys Direct Access Customers Dedicated Business Downstream Access Operators 6 Circa 500 SPDOs (Scale Payment Offices, classed as our smallest & rural Units in the estate) not included; Units excludes Offices co located with Mail and considers multiple Offices on one site as a single Unit

8 Example 3 Online order by 0pm for next day delivery using RM Tracked24 service. Parcel collected from customer and arrives at NDC by.30pm Parcel conveyed direct to Mail Centre by 5:00am Parcel sorted and despatched to local DO by 6:30am Parcel delivered to the customer by 4:00pm International Hub International Hub Next Day Option order by 0pm Collection Hubs c.,00 Work Bundling (Unaddressed Mail) Outward Mail 37 Cross dock at RDCs Inward Mail 38 Local Offices,268 HCT and Foot Shared Van Rural Points >30m Regional (RDCs) 6 Direct journeys Direct Access Customers Dedicated Business 7 Circa 500 SPDOs (Scale Payment Offices, classed as our smallest & rural Units in the estate) not included; Units excludes Offices co located with Mail and considers multiple Offices on one site as a single Unit

9 Royal Mail s tracked service (T24/T48) is as competitive as any other market offering and we experienced volume growth of 38% during Confirmation Text Customer Order Royal Mail Pipeline Customer Service Points Order Customer Warehouse Regional Centre Inward Mail Centre Office Delivered home or To your neighbour Order Customer electronically advises order Electronic preadvice Scan Point Scan Point Scan Point Delivered to your Safe Place Scan Point 8 Includes T24 & T48 products, excluding tracked returns

10 The Royal Mail Tracked Returns process is also the most convenient for this growing market. Estimated Share of returns¹ Drop into one of c.,500 Post Offices 67% 33% Royal Mail Drop into one of,268 Customer Service Points Further convenience in the form of Labels to Go which allows us to print your return label from a simple QR code 9 Internal estimate based on Triangle Management Services/RMG Fulfilment Market Measure (205); defined as individually addressed parcels and packets, generated and delivered in the UK, weighing up to 30kg, that do not require special handling.

11 We have progressed cost reduction across all elements of cost as the major contributor to the % UKPIL cost reduction and the 225m avoided cost Almost 70% of UK Core Network costs relate to collection and delivery Upstream Upstream Downstream Downstream Royal Mail Supply Chain Collection Outward Sortation 2 Network Inward Sortation 2 % of Core Network c.% c.3% c.5% c.0% c.4% c.57% Costs Our costs are c. 5bn p.a. 0 Represents core network costs, excluding international conveyance and delivery charges. Also excludes all other UKPIL costs including Parcelforce Worldwide and central overheads and is pre transformation costs. 2 Includes international export and import processing costs.

12 Transformation is ongoing as we further enhance the customer proposition and reduce our costs.. Collections Processing Outward Processing Network National Logistics Customer What we have achieved Key Stats (6/7) All collection routes re planned Low volume boxes collected on delivery c.50,000 boxes now collected on delivery c.5,000 pillar boxes PDAs on all routes Mail Centre closure programme complete Weekend processing Installed first parcels sorter 83% of letters auto sequenced 38 Mail Extended acceptance to 8pm /.30pm and over the weekend Reduced national network miles Introduced double deck trailers (DDTs) Reduced estate Introduced telemetry in vast majority of large fleet / one third of smaller fleet 6 RDCs Annual mileage 03 million miles p.a. c.k Double Deck Trailers 39 flights per day New delivery methods complete Reduced estate Reduced routes New PDAs on all routes,268 Units (exc SPDOs) 2 00% new delivery methods c.60,000 routes PDAs on all routes c.80% of suitable letters now posted with Mailmark indicia, e.g. Bulk Mail. 2 Units excludes Offices co located with Mail and considers multiple Offices on one site as a single Unit Extended opening hours Technology enabled Customer Service Points Safe place / to neighbour extension Click & Drop c.80% of letters with Mailmark Two thirds of parcels barcoded c.40% of UK have access to parcels collections on Sundays

13 We have a positive track record of delivering productivity improvement over recent years Index / 20/2 202/3 203/4 204/5 205/6 206/7 Workload Gross Hours Productivity 2

14 While reducing costs, we are continuing to deliver on our promise to the customers Customer Satisfaction 93.% First Class regulatory quality of service 98.9% Second Class regulatory quality of service 78 mean score for Business Customer Satisfaction Number in customer service 2 Number 2 in Money Saving Expert survey of delivery companies Employee Engagement Employee engagement score above the IPSOS large organisation norm (57) Over 70,000 colleagues involved in the Big Conversation with senior leaders Low levels of attrition Ongoing commitment to the best terms and conditions in the industry 3 IPSOS Mori Internal presentation Royal Mail Group Employee Survey Overall Results 05 May As recognised by consumer advocacy website, A Spokesman Said in the delivery sector in 207

15 Finally, transformation remains ongoing as we further enhance the customer proposition and reduce our costs. Collections Processing Outward Processing Network National Logistics Customer Extend Collections on Reduce collection hubs Extend preparation of mail upstream to reduce indoor sortation Extend parcels automation Pilot next generation large letter automation Reduce letters footprint Extend acceptance times further Extend barcoding on parcels and letters Further reduce fleet movement Reduce regional distribution Extend telemetry use to reduce fuel and maintenance costs Grow third party vehicle maintenance Reduce indoor workload Extend trial of new delivery methods Further reduce delivery routes Develop and embed new route planning / tracking technology We are clear on our purpose and direction Roll out more convenient delivery options Introduce more flexible opening hours Roll out delivery confirmation standard parcels Launch estimated delivery times 4

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