Home delivery out, postal rates up at Canada Post

On Dec. 11, Canada Post unveiled its “Five Point Plan,” aimed at returning the corporation to profitability, with changes taking effect in the new year. Highlights of the plan include the cancellation of home delivery in favour of community mailboxes, more franchise outlets, fewer sorting plants, fewer employees, and changes to the pension plan. Most of the changes have been reflected in a Canada Post-funded report by the Conference Board of Canada, and been the subject of a Canada Post controlled dialogue with Canadians. The corporation, which is losing money, has a mandate to be self-sustaining. Canada Post spokesman Anick Losier said that in the public dialogue, it became clear that Canadians wanted the same thing. “When we did our consultation the one thing that was crystal clear is that Canadian’s don’t want to see a burden on their taxes,” Losier said. While some of the initiatives require government approval, Lisa Raitt, minister responsible for Canada Post, issued a statement the same day saying she supported the changes.

NO HOME DELIVERY
Over the next five years, home delivery of mail will cease.
According to Canada Post, the 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. The corporation claims many Canadians prefer community mailboxes as they offer individually locked mail and small-packet compartments as well as locked compartments for securely receiving parcels. Losier said she prefers community boxes.
“All my life I never had home delivery,” she said. “When I came to Ottawa I got it and I don’t like it. I’m not home during the day and my mailbox isn’t locked. I have had people go into it in the past.” The neighbourhoods slated for conversion in the second half of 2014 will be announced once plans are finalized. The change, including the related staffing reduction, is expected to save $400 million to $500 million per year once fully implemented.

NEW PRICES
March 31, 2014, will see a new pricing structure for lettermail mailed within Canada.
Under the proposal, Canadians who buy stamps in booklets or coils will pay $0.85 per stamp. Consumers who purchase stamps one at a time, which represents an estimated two per cent of stamp purchases, will pay $1 per stamp. Metered mail will be at a new discounted rate of $0.75 per letter, and lower rates will be applied to mailers who reduce processing, such as pre-sorted mail. There will be proportional increases in rates for United States, international, oversize and overweight mail, without the discounts. The changes, which will require legislative approval, are significantly higher than the currently regulated rate of $0.65, due to take place in January 2014. Canada Post has announced that it will forgo that increase, and not implement any price changes until March 31.

As part of the plan, Canada Post has cancelled the sale of permanent-rate domestic stamps until March 31, according to Losier, adding that the plan is to resume P-rate stamps after the increases take place. She said new definitive stamps will be issued in January featuring Queen Elizabeth II, Canadian pride, and baby animals, but the stamps will bear the current $0.63 rate, rather than the P-mark.
According to Canada Post, the average Canadian household purchases fewer than two stamps per month. The new rates are expected to raise revenue to $200 million from $160 million per year.

MORE FRANCHISES
The corporation will also seek to increase the number of revenue post offices by partnering with local retail businesses.
Post offices will continue to have a role in the delivery of parcels that are too large for community mailboxes, items requiring a signature, or items which must be kept at room temperature. While Losier said there are no plans to close urban post offices, Canada Post will align its corporate post offices to customer traffic patterns. Those changes may include reduced hours of operation, reduced inventory, or installing self-serve parcel lockers and automated kiosks. The change is expected to generate $40 million to $50 million per year.

STREAMLINED 
OPERATIONS
Changes to internal operations will result in further consolidation of mail processing into major plants.
That will also mean an end to the twin-box system used in some communities, where mailers use one box for local mail and another for mail going out of town. Another change will involve providing more delivery employees with fuel-efficient vehicles, so the same employee can deliver both mail and parcels. The changes are expected to save $100 million to $150 million per year.

LABOUR COSTS
Canada Post’s largest single expense is labour, so the new business model will require fewer employees. The company plans to reduce labour costs mostly by 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, as called for by the plan. Canada Post will also take the necessary steps to permanently address the sustainability of its pension plan. Up until now, Canada Post has been exempt from making payments required to restore the plan to solvency, and the Government of Canada has informed Canada Post of its intent to provide temporary pension relief from the need to make the payments for 2014, estimated at $1 billion.

A recent agreement with the Canadian Union of Postal Workers (CUPW) has increased the age at which new employees qualify for an unreduced pension by five years, from age 60 (or 55 with 30 years of service) to age 65 (or 60 with 33 years of service). Pension contributions by employees have increased, moving to a 50-50 cost sharing with the company. The plan states that it will return Canada Post to financial sustainability by 2019. The report does not include any savings expected in labour costs and from restructuring the pension, because these are yet to be addressed through future rounds of collective bargaining.

UNION OPPOSED
In a prepared statement, CUPW called the plan a “rash decision to gut public postal service for millions of Canadians.”
“If this happens, it would be the end of an era for Canada Post,” said Denis Lemelin, CUPW national president. “We recognize that Canada Post needs to change, but this is not the way. “We are sure we are not alone in disagreeing with Canada Post’s plan,” said Lemelin. CUPW will stand with those people who resist the elimination of door-to-door delivery. CUPW has been vigorously campaigning to bring back and expand postal banking, with growing support from municipalities and groups across the country. Postal banks have been proven to be a solid source of income for post offices and a much-needed financial resource for people in other parts of the world.
Lemelin said other postal administrations are addressing the problem of falling volumes of letters by introducing new revenue-generating services, such as postal banking, financial services and the introduction of new parcel delivery options.”

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