Community Mailboxes, Fiscal Balance, and Canada Post

In 2014, Canada Post will begin implementing changes to its mail operations in urban neighborhoods. The crown corporation announced this past December that it developed a five-point plan to economize and improve postal services across the country. Canada Post will implement these changes gradually in order to stabilize its financial position by 2019, despite warnings that they will only worsen its decline. The full effect of Canada Post’s proposed changes, however, remains unknown and there is still an opportunity for success.

Canada Post published its five-point plan on 11 December 2013 on its website:

1) Community Mailboxes

Beginning in 2014, the proportion of Canada’s population that receives door-to-door mail delivery will have their mail delivered to community mailboxes: “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. The transition is expected to take 5 years to complete on a national scale.” Despite complaints about this transition, Canada Post already services rural Canadians using community mailboxes and it appears as though the model is successful.

2) Stamp Price Increases

The price of stamps will increase revenues and incentivize bulk purchasing, resulting in a larger price increase for those who purchase stamps individually. Canada Post’s price for first-class mail delivery will increase from $0.63 to $1: “Under these changes, the majority of Canadians, because they buy stamps in booklets or coils, will pay $0.85 per stamp. The minority of consumers who purchase stamps one at a time will pay $1 per stamp.” It is important, however, to view this price increase as necessary for achieving fiscal balance.

3) Expanding the Postal Franchise

Canada Post plans to open franchises in additional retail locations across the country: “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.” In 2008, there were over 90 Canada Post outlets opened in Shopper Drug Marts across the country. These outlets provide convenience to consumers and adding new outlets into various retail locations should increase this accessibility.

4) Streamlining Operations

Due to technological advances, Canada Post will reform its internal operations to facilitate more efficient mail service delivery. Canada Post plans will serve customers better through a more elaborate and effective method of parcel tracking and central processing. The changes include quicker mail sorting equipment, consolidating operations, and using fuel-efficient vehicles: “Improved operations will yield cost-effective and more reliable delivery to Canadians, along with better parcel tracking capabilities.” To retain customer loyalty, Canada Post’s operations must reflect current realities and these changes demonstrate its willingness to tailor their operations to new demands.

5) Labour Costs

The most controversial initiative is Canada Post’s plan to cut its workforce and renegotiate the company’s employee pension plan. There are agreements between Ottawa and Canada Post that safeguard the pensions of current employers, however, future employee pension plans are at risk. Because these changes require less labour, Canada Post is hoping to reduce unemployment through attrition, as opposed to layoffs (which reduces the risk of involuntary and unexpected unemployment).

Technological innovation is primarily responsible for declining demand of mail services delivered traditionally by couriers, such as Canada Post. For example, online banking is a cheaper alternative to paper billing and email services are more efficient than first-class mail deliver. Parcel delivery, however, is expanding due to the popularity of online shopping. These shifts and their economic consequences have compelled Canada Post to seek a new direction in order to avoid an estimated $1 billion in financial losses.

The reality, of course, is that measures to increase efficiency can reduce short-term employment. It is arguable that competent service-delivery justifies this result. Trimming Canada Post also lessens the burden placed on Canadian taxpayers. These changes are necessary in order for Canada Post to operate both competitively and competently. The five-point plan demonstrates at least some willingness to adapt to current realities with as little disruption as possible. Institutions must acclimatize to customer preferences and Canada Post is gearing to improve their services in a practical, convenient manner.

Rachel Lowe is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

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