Canada Post has announced that it will phase out door-to-door mail delivery in urban areas, a massive shift in the business strategy of the struggling Crown corporation that will fundamentally change the reason for its existence.
The evolving delivery strategy is part of a five-point plan announced on Wednesday to overhaul the system starting next year. Other changes include boosting the price of stamps and cutting as many as 8,000 jobs.
"The postal system as we know it today evolved over decades as a convenient and low-cost way to communicate, receive and pay household bills," says a video released to explain the change.
"The rise in digital communications has provided a faster and cheaper way for Canadians to do many things online that they used to do by mail.”
Last year, Canada Post delivered one-billion fewer pieces of mail than it did in 2006. The Conference Board of Canada has said Canada Post would lose $1 billion a year by 2020 if it did not make fundamental changes to the way it did business. Consider this that fundamental change.
The new delivery process, which will see Canada Post deliver mail to downtown community mailboxes (similar to the process already in place in rural areas), will affect the way one-third of Canadian households receive their mail. It will effectively end door-to-door service anywhere in Canada. The change will be made over the next five years.
The cost of sending letters and packages will also increase. The price of stamps will jump from $0.63 to between $0.85 and $1. The service will also cut between 6,000 and 8,000 positions, although it says those positions will come off the books without layoffs, with 15,000 employees set to retire in the near future.
The other two points in Canada Post's five-point plan affect daily use of the system slightly less. The agency will launch more franchise postal outlets located in stores, rather than standalone offices, and make changes to the internal flow of mail and packages.
Ending door-to-door service will cut back on the number of negative interactions between mail carriers and the public, such as the clichéd-but-frequent clashes with dogs or this Manitoba standoff involving steep steps.
Then again, that can’t really be considered a positive change when you consider that it comes by phasing out public interaction entirely.
On the one hand, the price of mailing a letter is nearly doubling. On the other hand Canada Post will only carry it half way. Wait, what?
— Andrew Coyne (@acoyne) December 11, 2013
The announced change launched a debate over what Canada Post should be. While many felt the death of doorstep delivery would kill the struggling service, there were those who agree a change must be made. John Lornic previously wrote in Canadian Business that Canada Post's future lies in parcel delivery.
"According to one estimate, the size of Canada Post’s B2C parcel business will exceed the letter business by 2015," he wrote.
"Still, parcels account for only 22% of Canada Post’s overall revenues. In other words, Canada Post needs to hoover up a lot more of the growing e-commerce parcel business (and do so against formidable private-sector competitors), before that business line produces the sorts of dividends needed to offset losses in the so-called legacy letter-mail business."
Others felt that ending door-to-door service was the wrong way to address the diminishing need for mail delivery. One popular thought was to simply cut back service to one delivery a week. This would allow personal delivery to continue, albeit without the immediacy of daily delivery.
One thing that idea does not consider is that two-thirds of Canada already does not receive door-to-door service, whether that be though condominium cubby holes or the larger community mail boxes implemented in rural Canada.
On the other side of the spectrum are those who feel reducing service at all is wrong.
The Canadian Union of Postal Workers called it "short-sighted and foolish. President Denis Lemelin said it would be the end of an era – and not in a good way. NDP MP Olivia Chow says the cuts will "have the biggest impact on seniors and persons with disabilities".
Yahoo Canada News' Andy Radia says the cuts are likely to become an election issue. "But, again, postal delivery is always hot political potato: It's an issue that affects every Canadian and a policy that voters will be reminded of everyday as they purchase stamps or make the trek to their community mail boxes," he wrote.
So, ultimately, we shouldn't be surprised that the opposition parties are jumping on this issue.
The bottom line is that Canada Post was bleeding money. It continued to provide a service that, while once integral and necessary, had become more hassle than it was worth. On the outset, it seems like Post brass correctly identified where the market is going, and found a way to shift what they were to what they should be.