Canada Post to phase out door-to-door delivery in urban areas

Cornered by unsustainable labour costs and significant annual shortfalls, Canada Post will be phasing out door-to-door delivery of regular mail to Canadians living in urban areas.

The phase out will occur over a period of five years beginning in the second half of 2014 for one-third of Canadian households. Residents that receive their mail at the door will be converted to community mailbox delivery.

According to Canada Post, “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.”

This will also reduce Canada Post’s workforce by 6,000 to 8,000 positions or about 12 per cent of its total employees. However, the crown corporation is also expecting that 15,000 employees will also be retiring or leaving the company on their own will.

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.

In addition, starting on March 31, 2014, the cost of a stamp will be raised to 85 cents each if purchased in a bulk pack, raised from the current 63 cents. Individual stamps will also cost a dollar.

Other changes include expanding its postal franchise program by partnering with retail businesses to provide Canadians with more service. It will also streamline its internal operations through the use of technology (such as sorting equipment), consolidation (such as processing mail and parcels in a central location) and provide more delivery employees with fuel-efficient vehicles, so the same employee can deliver both mail and parcels.

Once fully implemented, the initiatives are expected to generate financial benefits with an estimated combined worth of $700 million to $900 million per year.

Federal Transportation Minister Lisa Raiit supported Canada Post’s action plan, saying “Due to the lack of demand, mail volumes have dropped almost 25 per cent per address since 2008 and continue to fall. This is leading to a steep decline in revenues for Canada Post.”

While letter mail volumes have plummeted, parcel volumes have shot up with more people shopping online.

What are your thoughts with these changes? Let us know by commenting below.

Image: Canada Post