On November 21, 2013 Canada Post reported a loss before tax of $129 million for the third quarter as a 7.3-per-cent decline in transaction mail volumes outweighed growth in both revenue and volumes in its parcels business.
Starting in 2014, there will be big changes in the Canadian postal system. Canada Post has released a major plan to change how it delivers the mail and how it prices postal services to reduce costs dramatically and still meet existing and expected needs of Canadians. Canada Post says the plan will return the postal system to financial sustainability by 2019.
Home Delivery Out; Community Mailboxes In
Beginning in the fall of 2014, home delivery of regular mail in urban centres will be phased out over five years. The one-third of Canadians who still get home delivery of their mail will instead have it delivered to community mailboxes. Community mailboxes have locked compartments for individual pieces of mail and small packages, and a system of locked compartments for larger parcels. The other two-thirds of Canadians already get their mail at community mailboxes, grouped mailboxes, lobby mailboxes, or rural mailboxes. The first areas to switch to community mailboxes were announced in February 2014.
New Postage Pricing
The days of a two-cent a year increase in stamp prices are gone. Canada Post is introducing tiered pricing for Lettermail(TM) (regular-sized mail sent within Canada). Beginning March 14, 2014, and pending regulatory approval, stamps bought in coils or booklets will cost $0.85. Stamps bought individually will be $1.00. The current rate is $0.63. Businesses that use postage meters will get a "discounted" commercial rate of $0.75 a letter. Canada Post estimates that the average household in Canada buys fewer than two dozen stamps a year (that's two a month) so the increase won't be too onerous.
Increasing the Number of Postal Franchises
Canada Post plans to partner with more local retail businesses which offer more benefits, such as convenient parking and longer hours. They also plan to streamline their corporate-run post offices. With the increase in online shopping, these outlets can offer more convenience for picking up parcels that don't fit in community mailboxes, for returning parcels, and for mail that requires a signature. Customers will increasingly be given the option to route a parcel to a specific post office.
Improving Canada Post Operations
The ongoing streamlining of operations is helping Canada Post reduce costs and compete in the parcel market. Changes to the processing network are not very visible to customers, but they do make it possible for new services to be introduced. Examples include better tracking capabilities, the Delivered Tonight(TM) pilot program in the Greater Toronto Area which lets customers order items by the afternoon and have them delivered the same evening, and the Deliver to Post Office service which customers can use when checking out at an online store to direct their orders to a more convenient post office.
Canada Post currently has higher labour costs than its competitors.
The average age of current employees is 48, and nearly 15,000 Canada Post employees are expected to retire or leave the company within the next five years. Canada Post plans to reduce its labour force - unionized, non-unionized, and management - by at least 10 percent over the next 10 years. In its Five-Point Action Plan, Canada Post says its objectives in all collective bargaining are to permanently address pension volatility, align its costs more closely with those of its competitors and improve operational flexibility.