Canada Post Restructures Business Model – to Survive

Blog Administrator | Canada Post, Postal Service, USPS | , , ,

By Abby Garcia Telleria

It looks like even Canada’s postal service isn’t immune from what’s plagued the USPS®. In a stunning (and eerily similar) move, Canada Post recently announced it would phase out home delivery in its urban centers within the next five years. Like its U.S. counterpart, Canada Post has also faced mounting losses and declining mail volume, mostly due to the rising use of digital communication and soaring pension costs.


Under its new plan, Canada Post will replace door-to-door delivery with community mail boxes. Residents will instead, go to a group mail box to collect mail and parcels. About one third of Canadian households still receive mail at their door. The other two thirds already get their mail through community mailboxes or at curbside rural mailboxes.

Eliminating home delivery is just part of the post’s “Five-Point Action Plan” to return its system to financial sustainability by 2019. The Canada Post cited a recent Conference Board of Canada study as a reason to act now, rather than later. The study projected close to $1 billion in losses by 2020 – a significant financial punch in the gut, unless the post makes serious fundamental changes to its operations.

“If left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers,” according to a statement from Canada Post.

The move definitely makes sense. According to the Associated Press, gradually weeding out door delivery service would save Canada Post roughly $542 million ($576 million in Canadian dollars) a year.

Here’s the lowdown on other points to Canada Post’s plan:

  • Change its pricing structure to reflect higher postal rates
  • Expand postal franchises to strengthen its retail network
  • Cut 6,000 to 8,000 jobs to streamline its operations and create a leaner workforce


The Parallels Stop There

While Canada Post’s push for financial recovery is similar to the plight of the U.S. Postal Service – there are some underlying differences. For one, Canada Post doesn’t have to ask the Canadian government for approval to make changes on how it runs its operations. According to Canada Post, the organization has a mandate from the federal government to fund its operations with revenues from the sale of its products and services, rather than taxpayer money.

So unlike the USPS, Canada Post isn’t mired in congressional red tape. Earlier this year, USPS proposed cost-cutting initiatives that included discontinuing Saturday and door-to-door delivery, and most recently, to raise its postage rates. While Congress approved increasing postal rates, all other measures are still pending a final decision in Congress.

What could this mean for Canada Post? That it will have the ability to move ahead with its plans to right its ship – before it sinks.

— Abby Garcia Telleria is a senior copywriter at Melissa Data. She can be reached at abby(AT)melissadata(DOT)com.