Canada Post ending door-to-door delivery

by Carolyn Gruske

OTTAWA, Ontario—E-commerce is just one of the reasons Canada Post is citing as a reason to end residential door-to-door delivery and replacing it with community mailboxes.

“While Canadians are communicating and shopping more online, they often aren’t home during the day to check their mailboxes for sensitive items that are increasingly sent through the mail, such as identification, credit cards or prescriptions,” writes the Crown corporation in a its “Five-point Action Plan: Ready for the Future.”

According to the plan, which was released this morning, the postal service requires the “comprehensive plan to realign how it delivers and prices postal services to meet Canadians’ emerging and future needs, while reducing costs substantially”.

The five key points Canada Post addresses in its plan are:

  • community mailboxes
  • pricing
  • postal franchises
  • streamlining operations
  • labour costs.

The switch to community mailbox from door-to-door delivery, which is likely to generate the most out-cry from home owners, is being positioned as something that will bring a minority of Canadians in line with the service already delivered to the majority.

“The one third of Canadian households that still receive their mail at their door will be converted to community mailbox delivery over the next five years. (The other two thirds already receive their mail and parcels through community mailboxes, grouped or lobby mailboxes or curbside rural mailboxes.)”

It promises increased security with the community mailbox system.

“Residents enjoy peace of mind when they are away, because mail will no longer accumulate at the front door or sit in an unlocked mailbox.”

Canada Post also stresses the e-commerce convenience factor.

“Each community mailbox contains locked parcel compartments making online shopping easier for Canadians, especially those who are concerned about how they will receive their parcel if they are not home to receive it.”

Cost-cutting is also given as a reason why the switch is happening.

“Cost is also a factor behind the community mailboxes initiative. Given the irreversible decline in mail, it has never been more important for Canada Post to control its costs so it can continue to provide a high level of service at competitive prices. Delivering to a community mailbox is much less expensive than delivering to the door.”

Beginning on March 31, 2014, the price of mailing letters or parcels will change significantly, as outlined below:

  • stamps purchased in booklets or coils will be 85 cents each up from 63 cents today for letters weighing up to 30 grams.
  • letters (up to 30 grams) processed with a postage meeting will qualify for the commercial rate of 75 cents
  • mailers that use incentive lettermail techniques pay a rate lower than the 75 cent metered price
  • single stamps will cost $1.00, up from 63 cents today.

The action plan provides the following estimates for the cost of the new charges:

“Canada Post estimates that the average household buys one dozen to two dozen stamps a year, so the pricing increase will add less than $5 in annual costs per household.

“For small businesses, which on average purchase fewer than 250 stamps annually, the increase will amount to less than $55 a year, assuming they take advantage of the bulk discount.

“Small- and medium-sized businesses that use meters to process their mail buy, on average, 1,800 stamps per year. These customers will incur roughly $200 in extra costs per year.”

Canada Post’s plan also calls for it to realign its network by “leveraging greater use of franchisepost offices” and by streamlining “the network of its traditional corporate post offices.

“Some of these post offices are in locations that are no longer convenient for customers. The company will look at making adjustments where customer traffic patterns warrant. This review may result in changing the hours of operation, reducing inventory, or installing self-serve parcel lockers or automated kiosks.

“Alternatives to post offices, such as kiosks and additional stamp shops, will also be tested in convenient locations that support the wider retail network.”

The plan drew attention to investments Canada Post has already made in new sorting technology in recent years, and stressed that the automation will play an increasingly important role in reducing costs in the future.

“As lettermail volumes continue to decline, Canada Post is well-positioned to take advantage of the new machinery to consolidate mail sortation and distribution across its network.

“The annual cost-savings targets put in place with these investments are already being surpassed, mostly due to attrition. Canada Post expects to surpass its goal of end-state annual savings of $250 million in 2017.”

Along with its network realignment, it promises more innovative delivery options, along the lines of two programs already running:

  • the “Delivered Tonight” pilot program which was launched in September and runs until February, which allows customers in the Greater Toronto Area to place orders with online retailers including Best Buy, Future Shop, Indigo, Mastermind Toys and, and have their orders delivered between 5:30PM and 9:00PM
  • the “Deliver to Post Office” service which allows customers to direct their online orders to the post office of their choice.

Canada Post’s action plan spells out its position on the cost of labour and to cut jobs. According to the document, “Canada Post’s labour costs are higher than those of its competitors, which is no longer sustainable. A realignment of labour costs to reflect the changes to the business is crucial to its future success.

“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 provides the Corporation with a unique opportunity to reduce its workforce.”

Canada Post says it “respects the collective bargaining process. In this plan, there are no imminent or unilateral changes in areas traditionally addressed by collective bargaining,” although it added it will take steps to ” permanently address the sustainability of its pension plan”.

The postal service said the plan was developed after months of consultation with residents and businesses, and that before the changes are implemented, alterations must be made to Canadian Postal Service Charter.