The volume of parcels being handled by UK Mail has surpassed its current operational capacity.

In its pre-close trading update for the financial year ended 31 March 2015, UK Mail said the final quarter saw a 12% increase in parcel volume on the same period of the previous year.

The spike, it said, is in part as a result of competitor City Link entering administration in December 2014.

UK Mail said its operating costs had been higher than expected as a result of the increase in parcels volume. It anticipates that this will remain the case into the first half of the new financial year until the opening of its new Ryton hub in July, when the extra costs will be absorbed.

The group as a whole expects to see revenue growth of 5% in the final quarter of the year, compared to the previous years’ results for the same period, contributing to an overall 1% revenue increase for the year.

Its mail business also saw a 5% increase in volume in the final quarter, while the courier sector of the business saw a dip. UK Mail said the courier business has, however, achieved revenue growth for the full year.

Guy Buswell, chief executive of UK Mail, said: "UK Mail is undergoing a period of significant investment and transition to make us one of the leading players in our markets, with continued product and service innovation and a new fully automated hub, which will create extra capacity and reduce operating costs across our network.

"We continue to see new opportunities to increase our share of the UK parcels market as a result of the improved competitive environment. The medium and long term outlook for the group therefore remains very positive."

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