New hub set to deliver significant benefit to UK Mail

PARCELS delivery group UK Mail has said it expects its new automated hub near Coventry to be fully operational from May next year – providing a “significant step forward” for the business.

The company has been forced to relocate from its current base in Birmingham after the Government opted to compulsorily purchase the site because it lies in the path of the proposed £50bn HS2 high speed rail line.

In its annual results statement earlier this year, the company revealed it had secured £9.5m in compensation from the Department for Transport and HS2 Ltd.

It has opted to move into its new headquarters to Ryton – now part of Solihull-based ‘big shed’ developer Prologis’s Prologis Park Ryton scheme. The agreement is for a 231,000 sq ft office and mail sorting facility that will include a 36,330 sq ft head office building.

UK Mail is understood to have preferred to have stayed in Birmingham because of its better access to the UK motorway network. However, it quit the city because it could find no other site suitable for purpose.

Shareholders will be advised on the progress at the company’s AGM today.

In a pre-meeting statement, UK Mail said once the new hub was fully operational it would create extra capacity and help to reduce operating costs.

“Our key objectives during the relocation process will be to retain the knowledge and experience of our teams while maintaining our high levels of customer service.  Good progress is being made and we are on track to achieve our objectives in this key area,” it said.

The company also confirmed it had made a solid start to the current financial year, with overall performance for the first quarter in line with previous expectations.
 
Reported group revenues for the first quarter increased by 2.5% compared to the same period last year. Adjusted for there being one less working day in the period compared to last year, the underlying revenue increase was some 4.5%.
 
The Parcels business continued its good performance, with daily volumes for the quarter increasing around 10% on last year.  This volume growth was partly driven by an increase in home deliveries related to online shopping.

“We expect that the level of parcels volume growth will continue to moderate going forward as we annualise the higher volume growth achieved during the last financial year, reflecting the partial and temporary capacity constraints that we have previously disclosed, as we develop our new expanded and automated hub,” it said.
 
Daily volumes in its Mail business were slightly up on the same period last year and the group said the division had benefited from a number of recently won tenders, which it added would provide good volume growth for the remainder of the financial year.
 
Both the Courier and Pallet businesses were also said to have seen growth.
 
“With the strength of our market position, a well invested, integrated and automated network, and a growing suite of innovations and industry-leading products and services, we remain excited about the medium term growth prospects for UK Mail,” it added.