Wednesday 21 July 2021 3:22 pm

Online shopping frenzy to drive Royal Mail parcel volumes beyond pre-Covid levels

Royal Mail has seen early signs that domestic parcel volumes are re-basing at a higher level than pre-pandemic as consumers continue to be gripped by an online shopping frenzy. 

Domestic parcel volumes have swelled by more than a third in comparison with pre-Covid levels, in the three months to June 2021. 

But compared with levels seen in lockdown, domestic parcel volumes have sunk by seven per cent.

“With consumers no longer trapped in their homes with little option than to make purchases online, it was inevitable that the number of parcels sent through Royal Mail would slow,” senior investments and markets analyst at Hargreaves Lansdown, Susannah Streeter, said.

Shares were down 2.4 per cent in its afternoon trading, dragging its share price to 517.40

Senior investment manager at Brewin Dolphin, John Moore, said: “Trends are moving in Royal Mail’s direction, with parcel volumes appearing to re-base at higher levels than pre-Covid with more consumers shopping online. However, the bigger question is what is next for the business strategically and in terms of shareholder returns?”

The logistics and express services group GLS – which Royal Mail owns – saw its total revenue lift by 36.6 per cent on levels seen in 2019.

While Royal Mail’s revenue alone grew by 13.4 per cent on figures posted before the pandemic.

“We are starting to see evidence that the domestic parcel market is re-basing to a higher level than pre-pandemic, as consumers continue to shop online,” Royal Mail group chair Keith Williams said.

Parcel volumes lifted when the UK first went into lockdown and all non-essential retail was closed and people were required to stay at home.

“The future evolution of the pandemic, including levels of Covis transmission, consumer behaviour and economic factors such as GDP growth and inflation will impact on future performance,” the group said in a statement.