Canada Post reducing home delivery, increasing costs for postage

Send to a friend

Send this article to a friend.

A plan to address major financial losses for Canada Post will see door-to-door service end in cities, job cuts and major hikes in the price of stamps, from 63 cents to $1.

In a five-point action plan released Dec. 12, Canada Post showed  its plans to cut thousands of jobs, mainly through attrition, over the next five years.

Canada Post says due to declining mail volumes and increasing digital alternatives to mail, a new pricing structure for letters mailed within Canada will be introduced.

On March 31, 2014, Canada Post plans to launch a new tiered stamp pricing structure.

• New prices (before tax) will be launched for the customers that buy stamps in booklets and coils, representing 98 per cent of the volume sold in this category. The price (per stamp) will be $0.85, up from $0.63 today for letters 0-30 g mailed within Canada.

• Businesses that use postage meters will pay a new discounted postal commercial rate of $0.75 (per letter 0-30 g).

• Mailers who prepare mail in such a way that reduces processing costs (known as Incentive Lettermail) will have prices that are lower than the proposed meter rate of $0.75 for 0-30 g.

• Single stamps will cost $1 each, up from $0.63 today. Canada Post estimates that only two per cent of all stamps are purchased as singles. The vast majority of stamp purchases will be at the rate of $0.85, which is available for a minimum purchase of a booklet or coil.

The pricing for U.S., international and oversized Lettermail and mail weighing more than 30 g will also increase in line with the newly established pricing levels.

Prices for parcels and for addressed and unaddressed advertising mail will not be affected.

 

Here is the full plan:

Canada Post unveiled five initiatives that together will form the foundation of a new postal system designed to serve busy Canadians and meet their changing needs for postal services. It will also open new opportunities to businesses that are redefining how they connect and serve customers in an increasingly digital world. These changes will begin taking effect in the new year.

This comprehensive plan can be achieved without any changes to the Canadian Postal Service Charter. The integrated plan's five main initiatives are:

1. Community mailboxes

Over the next five years, the one third of Canadian households that receive their mail at their door will be converted to community mailbox delivery. This change will provide significant savings to Canada Post and will have no impact on the two thirds of Canadian households that already receive their mail and parcels through community mailboxes, grouped or lobby mailboxes or rural mailboxes. Community mailboxes have advantages for busy Canadians as they offer individually locked mail and small packet compartments as well as locked compartments for securely receiving parcels. The initial neighbourhoods slated for conversion in the second half of 2014 will be announced once plans are finalized. The transition is expected to take 5 years to complete on a national scale.

2. A new approach to pricing Lettermail to take effect March 31, 2014

Canada Post will introduce a new tiered pricing structure for Lettermail mailed within Canada, which will better reflect the cost of serving various customer segments. Under these changes, the majority of Canadians, because they buy stamps in booklets or coils, will pay $0.85 per stamp, with discounts for customers that use the mail most. The minority of consumers who purchase stamps one at a time, which represents an estimated 2 per cent of stamp purchases, will pay $1 per stamp. The average Canadian household purchases fewer than 2 stamps per month. These stamp price changes will take effect March 31, 2014.1

3. Expanding convenience through postal franchises

Canada Post will strengthen its retail network by opening more franchise postal outlets in stores across Canada. The company will partner with local retail businesses that are conveniently located in the communities they serve and offer added benefits, such as better parking and longer hours. This will allow busy Canadians to do more shopping in one place. Canada Post will also continue to align its corporate post offices to customer traffic patterns.

4. Streamlining operations

Changes to internal operations will make for a more efficient flow of parcels and mail through the network and to the customers. These changes are driven by technology (such as faster computerized sorting equipment), consolidation (such as processing mail and parcels in a central location) and providing more delivery employees with fuel-efficient vehicles, so the same employee can deliver both mail and parcels. Improved operations will yield cost-effective and more reliable delivery to Canadians, along with better parcel tracking capabilities.

5. Addressing the cost of labour

Canada Post is changing its business model and, as a result, will require fewer employees to serve the future needs of Canadians. With its current labour costs, Canada Post has a much higher cost structure than its competitors in the private sector have. This is simply not sustainable. The company will continue to bring the cost of labour in line with its competitors through attrition and collective bargaining over time. The average age of current employees is 48 and Canada Post expects nearly 15,000 employees to retire or leave the company over the next five years. This is more than enough to allow for the reduction of between 6,000 and 8,000 positions, mainly through attrition. Canada Post will also take the necessary steps to permanently address the sustainability of its pension plan. A leaner workforce will create a more flexible and competitive Canada Post, able to respond quickly to the changing marketplace.

Canada Post has a mandate to fund its operations with revenues from the sale of its products and services, rather than become a burden on taxpayers. With the increasing use of digital communication and the historic decline of Lettermail volumes, Canada Post has begun to post significant financial losses. If left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers. In April 2013, a Conference Board of Canada study projected a financial loss of close to $1 billion by 2020 unless Canada Post makes fundamental changes to its business. A projection of that magnitude was directionally consistent with Canada Post's own projections.

The implementation of this plan means Canada Post can return to financial sustainability by 2019. Once fully implemented, four of the five initiatives are expected to generate financial benefits with an estimated combined worth of $700 million to $900 million per year.2 Those figures do not include the significant annual savings expected in labour costs and from restructuring the pension, because these are yet to be addressed through future rounds of collective bargaining. The range in the combined benefits forecasted reflects the need for more detailed planning and the difficulty of accurately forecasting the pace at which Lettermail volumes will erode. Canada Post has factored in significant erosion.

Organizations: Canada Post, Conference Board of Canada

Geographic location: Canada

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Pat Haywood
    December 29, 2013 - 17:45

    will the "P" stamps still be good

  • Bruce Posch
    December 26, 2013 - 18:48

    That 35% increase in postage rates for regular postage is a brutal eye opener...but thank you for clubbing me hard enough to wake me up...if you had just did increases of 10% per year, I would have been angry but I would have kept using the mail. For some reason I still bought stamps and used the snail mail...I suppose I will now join the other 33 million Canadians and pay my personal bills over the net. But I'd like to point out that as a small business, I send many things through the mail on a business nature. I question how many small businesses will just shut their doors because of CP's new rates? This might be good for CP but it will hurt the entire Canadian economy and GDP overall.

  • Bryden
    December 17, 2013 - 20:50

    One part of your article was inaccurate, the part that said parcel prices would not be affected http://www.canadapost.ca/cpo/mc/assets/pdf/business/parcels_changes_2014_en.pdf http://www.canadapost.ca/cpo/mc/assets/pdf/rates/parcels_changes_2013_en.pdf

  • Canada post employee
    December 17, 2013 - 16:13

    I am an employee with this ridiculous corporation and I am so ashamed to even go into work now. What do they they think they are going to make by such a drastic increase. I will no longer mail out Christmas cards now because of this. It will cost me more to mail them than to make them!!! I am sure I am not the only oen who thinks this way and judging by the amount my little 60 box PO makes during Christmas season they will lose a lot of money. Awful way of thinking on their part. This is just robbery!!

    • Wroots
      February 25, 2014 - 20:48

      I usually send about 60 Christmas cards, half of which go to Canada and half to the UK. I have winced every year as the price of a stamp has increased by a penny or two or even a dime, but this excessive jump means that I will now email instead of mailing cards. I will also buy stamps for the UK next time I am there so that I can address and stamp cards here and send them with a friend to the UK for mailing there. It's a much more efficient postal service so I will be happy to support it. I am not going to pay $1.85 to $2.68 PLUS TAX per card to mail them from here. I will also pay all of my utility bills at my bank. So Canada Post, with just this one customer you are going to lose about $200 a year. Multiply me by everyone else you have pissed off and your sales are going nowhere but down. You thoroughly deserve it.

    • Wroots
      February 25, 2014 - 20:49

      I usually send about 60 Christmas cards, half of which go to Canada and half to the UK. I have winced every year as the price of a stamp has increased by a penny or two or even a dime, but this excessive jump means that I will now email instead of mailing cards. I will also buy stamps for the UK next time I am there so that I can address and stamp cards here and send them with a friend to the UK for mailing there. It's a much more efficient postal service so I will be happy to support it. I am not going to pay $1.85 to $2.68 PLUS TAX per card to mail them from here. I will also pay all of my utility bills at my bank. So Canada Post, with just this one customer you are going to lose about $200 a year. Multiply me by everyone else you have pissed off and your sales are going nowhere but down. You thoroughly deserve it.

  • Lynn
    December 17, 2013 - 12:30

    We currently receive door-to-door delivery. However, there are newer houses close to ours that use the "super-mailbox" to receive their mail. I also must use this box to deposit my outgoing mail. In the winter, access to this community box is difficult and sometimes impossible. Canada Post rarely clears the snow and ice. CP needs to up their commitment to maintaining the community "super-boxes", so they are accessible by ALL, 24-7. If I slip and fall and injure myself while trying to access the community box, due to climbing over a snow bank, is Canada Post going to cover my expenses for lost wages, health care and drugs?

  • Valerie Gagne
    December 16, 2013 - 18:58

    They cut the lower paying jobs, but do they ever look at upper management position, because you never see what they are making and how they can streamline those fat cats and their pensions. I have not used the mail for years when it comes to paying bills because I refuse to pay that much for a stamp and I will never use the mail for that purpose. I cannot remember the last time I paid for a stamp. Sorry but stamps are too expensive and increasing the rates will only make more job losses and more people going a different route, so keep it up and Canada Post will go bankrupt.

  • Me
    December 13, 2013 - 18:27

    #4 - The only way to actually streamline things is to disband the postal union. Unions are the reason we constantly have to pay more for fewer benefits.

  • Peggy Bendell
    December 13, 2013 - 13:27

    So Canada Post has withdrawn all the Permanent Stamps. How low in customer service will Canada Post go? They spent huge bucks on those stamps and now what are they going to do? Throw them away? And they complain about having lost money? The logical thing would be to not make any more after these are all sold out.

    • Bev
      December 18, 2013 - 09:59

      The post office won't lose money on these "Permanent Stamps" ... we will, all of us who purchased them because we paid for them "up front". We can be assured that we will not be reimbursed for our purchases, nor will we be able to exchange them for the new 85 cent stamps.

    • Bev
      December 18, 2013 - 09:59

      The post office won't lose money on these "Permanent Stamps" ... we will, all of us who purchased them because we paid for them "up front". We can be assured that we will not be reimbursed for our purchases, nor will we be able to exchange them for the new 85 cent stamps.

    • Nicole
      December 28, 2013 - 12:05

      The permanent stamps are just being held back until the increase, then will be sold again in the post office at the new rate. .... nice eh