Today, Canada Post released an integrated Five-point Action Plan that will form the foundation of a new postal system. This comprehensive plan will realign how the company delivers and prices postal services to meet Canadians’ emerging and future needs. It will also reduce costs substantially.
This plan reflects a conversation with Canadians over five months of consultations in 46 communities across Canada and online. Canadians told us that they live busy lives and want more convenience, especially as online shoppers, for parcel delivery and returns; that they are communicating and managing bills online; and that they do not want to support Canada Post with taxpayer funding.
The implementation of this plan means Canada Post can return to financial sustainability by 2019. Once fully implemented, four of the five initiatives are expected to generate financial benefits with an estimated combined worth of $700 million to $900 million per year, with more savings to be addressed through future rounds of collective bargaining.
The integrated plan’s five main initiatives are:
1. Community mailboxes (CMBs)
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.
2. A new approach to pricing
The changes we have announced today are significant and we understand there will be an immediate impact on businesses. Through our consultation with Canadians it became very clear that they do not support a taxpayer subsidy of any kind. We developed an integrated approach that would both decrease costs and increase revenue. We were not in a position to discuss these changes in advance, because of the size and scope of the integrated plan.
Canada Post is introducing a new tiered pricing structure for Lettermail, which will better reflect the cost of serving various customer segments. Stamp prices will increase, but there are discounts for customers that use the mail most.
- Customers that buy stamps in booklets and coils will pay $0.85, up from $0.63 today for letters 0-30 g mailed within Canada.
- Businesses that use postage meters will pay a new discounted commercial rate of $0.75 (per letter 0-30 g).
- Incentive Lettermail customers who meet volume and preparation requirements will benefit from significantly lower prices than stamp or meter rates, at $0.70 for Machineable Lettermail and $0.69 for Presorted Lettermail (per letter 0-30 g).
- Only 2 per cent of stamps are purchased individually. For this very small segment of single stamp purchasers, the price of a stamp will be $1, up from $0.63 today. As mentioned, the vast majority of stamp purchases will qualify for the rate of $0.85.
With the tiered-pricing approach, most customers will pay between 15 and approximately 30 per cent less than the single-stamp price. On average, Canada’s tiered postage rates will remain highly competitive compared to similar industrialized countries.
Prices for parcels and for addressed and unaddressed advertising mail are not affected by the Lettermail increase. They will undergo a normal rate action in January.
The pricing for U.S., international and oversized Lettermail and mail weighing more than 30 g will increase, falling in line with the new levels. However, the pricing for these services will not include a uniquely differentiated booklet or coil price.
3. Expanding convenience through postal franchises
Canada Post will open more franchise postal outlets in retail businesses. This will offer busy Canadians greater convenience, with better locations, evening and weekend hours and parking, and allow them to do more of their shopping in one place.
Canada Post will also streamline its network of corporate post offices, adjusting it to customer traffic patterns. This will include changing the hours of operation, reducing inventory, or installing self-serve parcel lockers or automated kiosks. All changes will honour the Canadian Postal Service Charter and the moratorium on closing rural post offices.
4. Streamlining operations
Changes to internal operations will make for a more efficient flow of parcels and mail through the network.
5. Addressing the cost of labour
The company will continue to bring its labour costs in line with its competitors through attrition and collective bargaining over time. Canada Post expects nearly 15,000 employees to retire or leave the company over the next five years. This is more than enough to allow for the reduction of between 6,000 and 8,000 positions, as a result of the plan’s initiatives. Canada Post will also continue to take the necessary steps to permanently address the sustainability of its pension plan.
This plan is about giving Canadians the postal service they need in the emerging digital economy. This is an exciting time for Canada Post. It is embracing the future and ready for the challenges ahead.
To read the report in full, please visit canadapost.ca.