Canada Post may not go the way of the Pony Express any time soon, but the national mail carrier is facing a financial crisis due to falling mail volumes that could cost it $1 billion a year by 2020, a new Conference Board of Canada report concludes.
Canadians mailed nearly one billion fewer letters in 2012 than in 2006, according to Canada Post. The Conference Board predicts those numbers will continue to drop by 25% by 2020.
The one upside is that e-commerce is expected to increase Canada Post’s parcel delivery by 26% over the same period.
“Canadians recognize that the way they use mail is changing, but haven’t yet fully understood how severely that is affecting Canada Post’s business model,” said David Stewart-Patterson, vice-president of public policy Conference Board.
“E-commerce is boosting demand for parcel delivery, but households are sending fewer letters, businesses are encouraging electronic bills, governments are moving to direct deposit and advertising is moving to the Internet. Canadians must consider what kind of postal service they really need in the years ahead.”
The conference board stated, “Canada Post managed a modest profit in 2012 but that will likely be temporary.”
The conference board recommends against increasing prices above the rates of inflation to cope with falling revenue. Instead, it recommends cost-cutting measures, including:
- alternate-day delivery (for mail only);
- replacing all door-to-door delivery with community mailboxes;
- reduced corporate offices in favour of more postal outlet franchises;
- wage restraint;
- reduced speed of delivery.
In a press release, Canada Post welcomed the report and said it plans to hold a public discussion with Canadians about the challenges it faces.
“It is clear that Canadians will continue to want and need a national postal service, but one built for the services they require today and in the future,” the corporation stated. “This will require fundamental changes on the part of the Corporation in order to avoid becoming a burden on taxpayers.”
