TD Fall Investing GuideTD Fall Investing Guide
http://www.canadianbusiness.com (© Rogers Digital Media 2013, All Rights Reserved.)
Updated: Tue, 17 Dec 2013 09:10:00 GMT | By Kate Wilkinson

Five reasons why the latest Canada Post changes aren't as bad as you think

Canada Post's decision to phase out home mail delivery over the next five years reverberated through headlines Wednesday morning.


CP

CP

Canada Post's decision to phase out home mail delivery over the next five years reverberated through headlines Wednesday morning and spurred a lively debate in Parliament this afternoon. The changes sound ominous-thousands of jobs eliminated and the end of urban mail delivery as we know it. But when you dig a little deeper, Canada Post's decision to take action in response to its falling revenue is necessary to its survival. And with many of us choosing to pay our bills and send messages online, the restructuring was inevitable. Here, then, are five reasons why the latest Canada Post changes aren't as bad as you think:

1. The job cuts are mostly through attrition

In Wednesday's announcement, Canada Post noted that between 6,000 and 8,000 jobs will be cut in order to save on labour costs. The good news is that most of these positions will be eliminated through attrition. Canada Post expects around 15,000 employees to retire in the next five years.

2. Canadians who still get their mail delivered to their home are in the minority (about one-third of the population)

The move toward having everyone access their mail via a community mailbox is really just an effort to create a common delivery system. The majority of Canadians pick up their parcels and letters from a community mailbox, and if it's going to save Canada Post financially, it just makes sense to have everyone getting their mail the same way.

3. The service is adapting to our mail delivery habits

It's not Canada Post's fault that it has to start finding ways of saving its own skin. As a society, we've stopped dealing with a lot of matters through the traditional postal system in favour of viewing our bills and accessing services online. According to Canada Post, there were 1 billion fewer pieces of mail delivered in 2012 than in 2006. Parcel deliveries are up, but still only account for 22% of the mail delivered in Canada (and many packages can be delivered to the larger compartments in a community mailbox).

4. Canada Post is bleeding money

The Crown corporation is in desperate need of turning its financial performance around, or it risks causing even more problems for its balance sheet, the government and Canadian taxpayers. Much has been made of the service's plan to raise rates, but a look at its financial status shows that it really doesn't have a choice. In the most recent third quarter, it posted a $129 million loss (last year's third quarter loss was $145 million), following a $76 million loss in the quarter before that. Based on a projection made by the Conference Board of Canada, the Post warns that it will be losing about $1 billion per year by 2020 if it doesn't shift its operations. In this Canadian Business article from October, Mount Allison University president Robert Campbell predicted that Canada Post has about a five-year window to reverse its financial fate. There's no time like the present to start making drastic changes.

5. There will be more post office locations

One positive development from the restructuring is the crown corporation's plan to expand on the number of Canada Post franchisees, which means more kiosks where you can make postal purchases, send parcels and pick up mail. If they can put this plan into action, it will be helpful no matter where you live.

With files from the Canadian Press and John Lorinc.

More stories from Canadian Business

Scroll upScroll down

Recently recommended stories

advertisement