Dec. 11 (Bloomberg) -- Canada’s postal service will scrap door-to-door mail delivery over the next five years and cut as many as 8,000 jobs to offset declining mail volume.
The Ottawa-based agency is also raising the price of stamps by as much as 59 percent next year, Canada Post said today in a statement that outlined steps to save between C$700 million ($660 million) and C$900 million a year.
“With the increasing use of digital communication and the historic decline of lettermail volumes, Canada Post has begun to post significant financial losses,” the postal service said in the statement. “If left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers.”
Canada is joining countries such as the U.S. and U.K. in attempting to cut the cost of government-run postal services amid declining volumes of letter mail. An April report by the Conference Board of Canada estimated the agency will lose nearly C$1 billion annually by 2020 unless it makes changes.
Canada Post will stop delivering mail directly to individual households, replacing the service with so-called community mailboxes. About a third of Canadian households currently have home delivery, it said, adding the change won’t affect households using rural mailboxes.
The Canadian government supports Canada Post’s efforts to operate on a “self-sustaining basis,” said Transport Minister Lisa Raitt, to whom the agency reports. “In today’s digital age, Canadians are sending less mail than ever,” she said in a statement.
Canada Post will cut between 6,000 and 8,000 jobs, or almost 12 percent of its staff, mainly through attrition. The agency will return to “financial sustainability” by 2019, it said. Canada Post employed about 68,000 people at the end of last year, the agency said in a financial report for the three months ended Sept. 28.
The cost of stamps will rise to 85 cents each for a booklet. An individual stamp will cost C$1, up 59 percent from the current price of 63 cents. The new prices go into effect March 31, Canada Post said.
“These hikes will have a significant impact on many small businesses that use the mail to connect with customers or invoice and pay suppliers,” said Dan Kelly, president of the Canadian Federation of Independent Business.
The department of finance said separately it will exempt the agency from making special payments to its employee pension plan, which has a deficit of C$6.5 billion.
The U.S. Postal Service, which is required by law to deliver mail six days a week to every address in the country, is working to convert commercial customers such as shopping malls to centralized delivery, said Sue Brennan, a service spokeswoman.
Mail delivery to 152 million U.S. addresses is the largest single fixed-cost for the U.S. Postal Service at more than $30 billion a year, Brennan said in an e-mail. Even as mail volume has dropped nearly 25 percent since 2006, U.S. letter carriers must still deliver to each address.
The Canadian agency’s plan is “short-sighted and foolish,” the union representing postal workers said in an e-mailed statement.
“We are extremely concerned that these changes will send Canada Post into a downward spiral,” said Denis Lemelin, national president of the Canadian Union of Postal Workers, in the statement. “The skyrocketing stamp prices will make the postal service inaccessible to many people.”
Olivia Chow, a lawmaker with the main opposition New Democratic Party, also criticized the plan. “These job-killing and service-cutting measures will isolate seniors, the poor and the disabled living in urban areas,” Chow said in an e-mailed statement.
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