Canada Post is saying goodbye to the door-to-door postal carrier as it looks for new ways turn around its money-losing business.
The national mail service says rising costs and falling mail volumes have made it impossible to continue its traditional operations, so it plans to put a five-stage plan into action that will help save up to $900 million a year.
The federal Crown corporation will phase out home delivery within the next five years by replacing delivery by foot with community mail boxes, raise postal rates and cut thousands of jobs.
Canada Post spokeswoman Carley Smith noted that most postal carriers are concentrated in urban centres, where businesses in particular receive letters delivered directly to their offices.
Home postal delivery is, of course, the main way direct mail marketing reaches Canadian households.
John Gustavson, president and CEO of the Canadian Marketing Association, said the CMA is supportive of Canada Post’s plan. “The financial health and survival of Canada Post has to be the first priority,” he said.
The CMA members that he’s spoken to aren’t concerned about the move to community mailboxes. “People are still going to pick up their mail, so that’s not an issue,” he said.
As for the price hikes, Gustavson said marketers “expect efficient national delivery service at a reasonable cost, and if you can do that, you will get our business… [Canada Post] has judged the marketplace on what the pricing will bear and that’s their right to do so, so we’ll see.”
Canada Post says about 6,000 to 8,000 positions will be eliminated over the same five-year time period, mainly through attrition. The postal service expects nearly 15,000 employees to retire or leave the company in the next five years.
The staff cutbacks are not factored into its financial projections, though Canada Post said those savings will be “significant.”
About a third of Canadian homes still receive mail to their door, it said.
The Canadian Union of Postal Workers called the cost-cutting decisions by Canada “short-sighted and foolish.”
“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,” he said.
The announcement comes in the midst of the busiest time of year for postal outlets, which handle a dramatic rise in both letters and packages for the Christmas holiday.
But the company says its business model is unsustainable, and it will start making the changes next year with the first neighbourhoods being converted to community mailboxes in the last half of 2014.
“Canada Post has begun to post significant financial losses,” it said in the announcement.
“If left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers.”
