Canada Post introduces a Five-Point Action Plan in an effort to return to financial sustainability by 2019, which includes the elimination of door-to-door delivery and 6,500 to 8,000 jobs, but opens up new private-business opportunities.
The first pillar of the crown corporation’s plan is built on converting the entire nation onto a community mailbox delivery system, effectively eliminating, over the next five years, the door-delivery service still enjoyed by around one third of all Canadian households. Canada Post expects this measure alone to save $400 to $500 million per year once fully implemented, which makes up the majority of savings within its Five-Point Action Plan.
In total, again once implemented in five years, Canada’s new postal system is expected to save anywhere from $700 to $900 million per year on its bottom line, relative to the current system.
This plan comes around eight months after an April 2013 study by the Conference Board of Canada that projected Canada Post’s financial loss would reach $1 billion by 2020 unless fundamental changes were made. In its 2012 Annual Report, Canada Post reported that Canadians mailed almost one billion fewer pieces of domestic letter-mail in 2012 than they did in 2006.
Canada Post’s second pillar of the 2019 action plan is a new approach to pricing domestic letter-mail, which is presented as the second most-effective new financial measure, expected to add $160 to $200 million to the bottom line. Beginning March 31, 2013, Canada Post is to introduce a new tiered pricing structure for domestic letter-mail, with stamps costing $0.85 each when purchased in booklets or coils and $1 each when purchased individually.
As its third pillar, Canada Post plans to open up more franchise postal outlets in retail businesses across Canada, particularly within smaller communities. This franchise post office approach is expected to contribute $40 million to $50 million to the bottom line.
Canada Post will continue to operate its corporate post offices. Some Canadians will have the option of steering their Canada Post deliveries to lock boxes held within registered private businesses. The initial neighbourhoods slated for community mailbox conversion in the second half of 2014 will be announced once plans are finalized.
Streamlining operations is the term used to described Canada Post’s fourth new pillar, which aims to create a more efficient flow of parcels and mail through the network and to customers. These internal changes include technology updates, such as faster computerized sorting equipment, consolidation, such as processing mail and parcels in a central location, and running more fuel-efficient vehicles. This fourth pillar is expected to save $100 to $150 million, annually.
The fifth pillar of Canada Post’s five-year plan is to address its cost of labour, which largely relates to the four preceding initiatives. The crown corporation expects to reduce its labour force by between 6,000 and 8,000 positions. The average age among current Canada Post employees is 48 and it expects nearly 15,000 employees to retire or leave the company over the next five years.
Soon after the Conference Board of Canada’s April 2013 study, Canada Post began to consultant Canadians about the future of their mail delivery. From mid-May until September 2013, senior managers of the crown corporation travelled to 46 communities across Canada to hold such conversations. Canada Post also invited Canadians to share their views online and by writing letters. As of October 15, 868 letters had been received.
Five-point Action Plan
Consultations with Canadians