Where Did Canada Post Go Wrong?

A look at the new Canada Post plan

The convenience of mail delivered directly to your front door could soon be a thing of the past. Canada Post is looking to make door-to-door delivery go the way of the milkman, by phasing it out by 2019. With a projected loss of $1 billion by 2020, changes were needed, but few expected them to be this drastic.

Community mailboxes have been around for decades in rural areas, but they’ll soon be a staple in major urban centres like Toronto and Vancouver. That’s not all – the price of stamps will skyrocket to as much as a dollar each. These changes will not only be a major inconvenience for a lot of Canadians – small business owners who rely the post office could be hard hit.

New Security Concerns

About a third of Canadians in urban centres today receive home delivery – that will be phased out over the next five years, starting in 2014 and replaced with the community mailboxes. Stolen mail is one of the leading causes of identity theft – with community mailboxes seemingly out in the open, they could be a treasure trove for thieves looking to steal your personal data. There is one shred of good news – parcels will be dropped at community mailboxes, so you’ll no longer have to travel to a postal outlet.

Delivery Killed By Digital

With the ubiquity of technology, such as laptops, smartphones and tablets, mail volumes took a nose dive, down nearly 25 per cent per household in the past five years alone. With fewer letters being delivered, it should come as no surprise fewer workers are needed. 6,000 to 8,000 jobs will be lost over the next five years, mostly through retirement, as 15,000 workers are expected to call it a career during that time.

With fewer workers, Canada Post is looking to become more efficient. It will open more brick and mortar franchise postal outlets in stores for greater convenience. It will also invest heavily in technology and infrastructure so workers can sort and deliver even more mail at once.

Small Businesses to be Hit Hard by Proposed Changes

Unlike its other changes, Canada Post isn’t waiting five years to increase the cost of stamps. On March 31, 2014, the cost of a single stamp will climb sharply from 63 cents to one dollar when purchased individually and 85 cents when bought in a pack.

Stamps, which used to be as common as a loaf of bread in most households, have become scarce in recent years – the average family buys less than two stamps a month. Although the cost increase in stamps will have an impact on seniors on fixed incomes, it will be small businesses who look to be hit the hardest. Many small businesses still use Canada Post to send cheques and invoices through the mail. The spike in the cost of stamps will likely be passed on by businesses directly to the consumer as a price increase.

The Postal Pension Deficit

Much of Canada’s Post’s woes are due to its pension problems, which have grown so bad they threaten to debunk the entire business. Like other defined pension programs, Canada Post is feeling the squeeze of baby boomers entering the market en mass. Currently, the crown corporation is suffering from a staggering $6.5-billion pension deficit that will only get worse if something’s not done.

The age of the average Canada Post worker is 48; many are poised to enter retirement soon and contribute to the deficit. A complete overhaul is needed of the pension plan, if Canada Post looks to survive for the years to come although they’ve been given a four-year pension holiday, the shortfall will have to be made up eventually, through higher contributions, taxpayer dollars, or a combination of both.

What Went Wrong At Canada Post?

Mail volumes have been falling for years, so why didn’t Canada Post make the necessary changes sooner? That’s the million dollar question. Canada now has the dubious honour of being the first G7 country to eliminate door-to-door delivery in urban areas. Meanwhile, just south of the border, the postal service is thriving in the U.S. Mail is delivered six days a week, including Saturdays.

What’s the answer to Canada’s Post money woes? Surely, there has to be a better way than eliminating home delivery. Scaling delivery back to three days a week would be a good start. Retailers like Loblaws and Canada Tire have been successful in the banking sector; perhaps Canada Post can follow in the footsteps of the postal service in France and do the same.

This is only the beginning of a long battle between Canada Post management and the union with consumers stuck squarely in the middle – only time will tell if these extreme changes actually go through.


Related Topics

Economic News

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>