Royal Mail has announced that the letters division of the business lost £120m last year. This is compared to a £20m profit a year earlier.  The business overall showed the worst performance for seven years.

This comes after a record increase in stamp prices last December. Businesses have already been hit by an 80% rise in the cost of renting a PO Box, which has increased to £170 per year.

Chief executive Moya Greene said she did not expect the letters business to make money this year and significant job cuts are expected. Nearly 65,000 full and part-time workers have left the business since 2002, including 5,500 in the past year. A total of 12 mail centres have closed, with at least that number again earmarked for closure this year.

Royal Mail said that competition from email, texts and social networking sites has led to a 22% decline in the number of letters sent each day and predicts that this will shrink by a further 5% a year over the next five years.

They have previously blamed losses on “suffocating” regulation, which requires it to deliver bulk mail at a loss on behalf of it’s competitiors. This includes bank statements, energy bills and marketing mail shots. Bulk mail is the only source of growth in a declining letters market, being predicted to represent more than half the total of all the post being delivered in Britain this year.

The average person now spends only around £18 per annum on postage.

Small businesses using the post may consider that 46p is a bargain price to pay for countrywide letter delivery. Yes,  courier services offer an alternative, but usually at a much higher cost. Nationwide one-price letter post may be a service that once lost, will never be regained.

Here at Freelance Advisor Towers, was can’t remember the last time we sent a physical letter. Do you still use the post? Could your business manage without it?

Photo by Sarah G – CC