Royal Mail Group is investing £75m in Parcelforce Worldwide in a move it says will create 1,000 jobs and fuel a decisive shift away from delivering letters to servicing online retailers instead.
Last year Royal Mail laid off 4,000 staff in a redundancy programme that cost £77m Photo: Alamy
The delivery service, which is undergoing a radical modernisation effort, said the investment will fund a four-year expansion programme that will include opening new parcel processing centre in Chorley in Lancashire next summer and two new depots in Cornwall and Hampshire.
The existing parcel hub in Coventry will be expanded and a further nine depots around the country will be extended or moved to bigger sites. Existing IT systems will also be updated, the company said.
Moya Greene, chief executive, said: “Our £75m investment is part of Royal Mail Group’s strategy to grow its parcels businesses in the UK and overseas. Our strategy is to convert the rise in parcel volumes in to profitable growth. That means becoming a much more customer-focused company being run on commercial lines and investing in new, vital technology.”
The investment in Parcelforce, which is the express and international delivery arm of Royal Mail, reflects the drive to keep up with the burgeoning business from online retailing, which research suggests will account for 12.4pc of GDP in 2016.
In the last reported financial year, the group’s parcels businesses accounted for 48pc or £4.2bn of total revenues.
The demand for express delivery is growing, too - Royal Mail said the UK’s express parcels market is currently worth £5.8bn a year.
The investment contrasts sharply with the radical cost-cutting to the company’s ordinary delivery service.
Last year Royal Mail laid off 4,000 staff in a redundancy programme that cost £77m. Letter volumes have fallen by 25pc since 2005 and are forecast to drop 5pc every year for the next five years. The company, whose “universal service” mandate requires it to deliver to every UK address for a single charge, has overhauled its sorting offices and sold off property to help cut costs and boost efficiency.
In June Canadian-born Ms Greene was criticised for her £1.1m pay packet, which followed a steep rise in the price of stamps. But Royal Mail said it had generated a profit for the first time in four years. The core postal business made an operating profit of £23m, up from a loss of £120m last year.
Mark Hoban, Minister for Employment, said: “It is great news that 1,000 new jobs will be created across the country as a result of this investment. We’ve now got a record number of people in employment and these jobs will provide welcome opportunities for people who are looking for work.”
The investment contrasts sharply with the radical cost-cutting to the company’s ordinary delivery service.
Last year Royal Mail laid off 4,000 staff in a redundancy programme that cost £77m. Letter volumes have fallen by 25pc since 2005 and are forecast to drop 5pc every year for the next five years. The company, whose “universal service” mandate requires it to deliver to every UK address for a single charge, has overhauled its sorting offices and sold off property to help cut costs and boost efficiency.
In June Canadian-born Ms Greene was criticised for her £1.1m pay packet, which followed a steep rise in the price of stamps. But Royal Mail said it had generated a profit for the first time in four years. The core postal business made an operating profit of £23m, up from a loss of £120m last year.
Mark Hoban, Minister for Employment, said: “It is great news that 1,000 new jobs will be created across the country as a result of this investment. We’ve now got a record number of people in employment and these jobs will provide welcome opportunities for people who are looking for work.”
