Royal Mail ready to stand up to the competition

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IN the shadow of Murrayfield Stadium, tram lines to one side and tenement houses to the other, a quiet revolution has been taking place.

Not that there’s anything within the gated entrance to the Royal Mail’s Russell Road delivery office to suggest anything untoward. Postie Tam McCathie is sorting through his deliveries for the day, the radio is blaring out chart music while he works, the red post vans are lined up outside waiting to go.

Royal Mail's Edinburgh City Delivery Office, Russell Road. Picture: Malcolm McCurrach

Royal Mail's Edinburgh City Delivery Office, Russell Road. Picture: Malcolm McCurrach

Later he and his fellow posties will hit the streets just as they have always done, the new wheeled trolleys and handheld electronic devices for signatures the only obvious suggestion that something has changed.

Certainly for us at home, the post might drop through our letterboxes a little later than it used to – the days of the morning and afternoon delivery are as ancient as the idea that we would write a thank you letter when e-mail is so much easier – but otherwise, the Royal Mail seems to do what it has always done, six days a week, like clockwork, for ­centuries.

And if a revolution really is under way – one aimed at ensuring the Royal Mail continues to function as it does now for generations to come – it certainly doesn’t appear on the surface to be in the “red letter” category.

Tam picks through the assorted envelopes in front of him – already bundled up by machines at the Royal Mail’s mail centre at Sighthill to make delivering them to letterboxes around his city centre beat easier.

In 34 years working for the Royal Mail, the changes he’s seen in the last few years are the most dramatic of all.

“We never had any of the mechanised stuff there is now,” he points out.

“The volume of mail – especially at Christmas used to be huge and we brought in casual workers to help out.

“It’s vastly different now. There’s a real difference in the volume of letters, there’s more advertising leaflets to deliver and more parcels.

“It’s completely changed.”

It is almost certainly going to change even more. For part of the current revolution at the city’s 25 delivery depots – which has already involved about 20 jobs being lost within the EH postcode area with the possibility of more to come – is geared towards making the service leaner, more efficient and better placed to tackle the oncoming threat from the private postie.

They have already arrived in places like London, Manchester and Liverpool, wearing Dutch-owned TNT uniforms, carrying letters and commercial mail to homes and businesses, undercutting the Royal Mail’s charges and squeezing its business harder every day.

TNT has plans to put at least 20,000 staff on the country’s streets, targeting major cities, which almost certainly include Edinburgh.

Paul Kelly, Royal Mail delivery director for North and East Scotland, says his own managerial job is among those under threat from a recently announced fresh wave of 1600 UK-wide redundancies. He doesn’t underestimate the potential threat from rivals.

He says: “We are concerned about it. It could have serious financial implications for us.

“Today in Liverpool there will be streets with a Royal Mail postman and TNT ­postman.

“Everywhere in Liverpool will see the Royal Mail postie, but only certain parts – the parts that TNT want to deliver to, will see a TNT one.”

That is, he insists, not quite a level playing field, not when Royal Mail has a commitment to deliver six days a week across the land, with a “one price fits all” promise and a ­requirement to ensure first class post arrives next day at least 93 per cent of the time. The Russell Road depot is hitting 94 per cent.

Confronted by new competition, shifting trends in how customers use the service, the rise of e-mail and death of the letter, the recently privatised business is now entering the second phase of a massive overhaul, involving streamlining its management structure by shaving off hundreds of jobs in a bid to save £50 ­million.

It means more changes are on the way for a service that has already dramatically altered the way it works since Tam’s early days of delivering post on his first Leith beat.

The 300,000 items of mail that arrive every week at Russell Road destined for EH1, EH2 and EH3 postcode areas – a mix of homes and businesses, including Stockbridge, Princes Street, the Royal Mile and Marchmont, with 26,000 “delivery points” in between – is already ­mainly sorted by machines at the city’s Mail Centre in Sighthill.

They “read” the postcodes – they’re getting better at deciphering even scribbled handwriting, insists depot boss Scott Marsland – and print the double red-coded bar across the envelope, which many of us see on our post but rarely pause to wonder what it is.

It arrives at Tam’s colour-coded sorting frame mostly in order, leaving just the tricky items – those without postcodes, with addresses behind clear film panels in the envelopes which defy the machines, or in need of redirection, to be handled.

“This is a quiet time of year,” says Tam, popping post destined for Leith Street into a purple dookit, Gayfield Close mail into pink, Union Place, black.

“You should see it in October – that’s when the Christmas rush starts and we have lots of business mail and people ordering things online.

“It’s all different now,” he adds. “The big thing is the number of parcels and the size of parcels.

“A lot of people get their parcels delivered to work,” he says, holding up a large packet stamped by internet lingerie store Figleaves and destined for Scottish Widows offices. “The postroom staff at some places complain about this kind of thing, it’s extra work for them.”

And, of course, an extra load for delivery staff like Tam, whose bags are now stuffed with parcels and large packages. Around 5000 parcels are handled at Russell Road every day.

“I once had to deliver a mattress to a top floor flat,” says Tam. “Times I feel like I’m a furniture removal man, not a postman. The workload has gone up, but I can’t say the Christmas tips have.”

It is that shift from light items to bulky boxes – many of the parcels contained in the trolleys being shuffled from station to station in the depot are stamped Amazon – plus the threat of the private postie, that has driven a major modernisation of the service and, points out Paul, the need to raise money to fund it.

“We needed access to external capital to continue to modernise,” he says, referring to the recent controversial move to sell shares in the business – a deal which led to anger that the price was set too low, losing the taxpayer millions.
“Competition means we have got to get better. If we stand still we are going to struggle,” he adds. “Part of the modernisation is about being fit for competition and the other is expanding parts of the ­market.”

Nationally Royal Mail sets about handing out 74,000 electronic signature devices for posties to carry and 16,000 small vans to get them around. Locally, entire delivery depots such as Russell Road have been gutted and reconfigured. All the Edinburgh depots are now complete. Staff roles have changed and people have left, all while the thousands of items of mail continued to be sorted and delivered every day without a halt to the service.

Managers Paul and Scott both pay tribute to the city’s postal staff who worked through the difficult reconstruction. “Talk about modernising and transforming a business are nice words but in the EH postcode area nearly 1400 people’s lives were radically changed at work,” says Paul.

“Sometimes it’s impacted on take home pay. There have been redundancies, all voluntary. Some full-time jobs went part time, others went part time to full time.

“Our staff see letters reducing and parcels going up. They understand the commercial ­reality.”

About 5000 parcels pass through the Russell Road depot every day, rising to nearly 14,000 during the Christmas rush.

Over the course of a normal week, the depot’s 82 staff, including three part-timers and counter staff – who are the face of the service for householders calling to pick up packages that couldn’t be delivered – handle 300,000 items of post.

A fleet of 29 little red vans head out every morning destined for 46 delivery routes with a target to have all the post delivered by 3pm.

Postman driver Alan Reynolds, whose route covers the West End has worked for Royal Mail for 25 years and like Tam has seen massive changes. “There are different types of mail now,” he points out. “Things like leaflets, you’re going up and down a lot more stairs delivering to every ­letterbox.

“When we did two deliveries a day, the load was much smaller. The job has got a lot more physically demanding.”

Changes, adds Paul, have been essential, even though it means some households not receiving post until mid-afternoon.

“We are a very trusted brand,” he stresses. “There’s a lot of pride in Royal Mail and a lot of affection. People trust their postman. But the market is open to fierce competition. We have had to modernise.”

Legal obligation gives competitors unfair advantage

TNT Post began an end-to-end delivery service competing against Royal Mail in April 2012 in West London. It now operates in three London areas and in Manchester. It created 500 new jobs when it launched in Liverpool last month.

Its deliveries there include commercial post like bank statements and council letters such as council tax bills.

The Dutch-owned business has plans to create a national delivery network by 2015.

Royal Mail, established in 1516, has argued that its legal obligation to deliver “one price goes anywhere collections” six days a week gives competitors an unfair advantage and enables them to select when and where they deliver.

While Royal Mail postal staff deliver to every street every day, TNT target streets once every two days.

However in areas where TNT has begun door-to-door deliveries, Royal Mail workload is reported to have slumped by 15 per cent.

Royal Mail, which employs 150,000 people in the UK, announced plans for 1600 redundancies among managerial and office staff last month in a bid to make £50m savings. Three hundred new roles will be created.

Postal workers unions have responded by threatening to ballot for industrial action.