Canada to phase out home postal delivery to stem losses

Canada's postal service will phase out urban home delivery within five years and raise the cost of postage stamps to try to stem soaring losses.
Canada's postal service will phase out urban home delivery within five years and raise the cost of postage stamps to try to stem soaring losses. MARK BLINCH

TORONTO — Canada's postal service said Wednesday it will phase out home delivery in urban centers within the next five years, facing continued financial losses as Canadians send less mail and go online instead.

Canada Post, a government corporation, said it will replace foot delivery with community mail boxes. About a third of Canadian homes still receive mail to their door. 

A Conference Board of Canada study estimated savings of $542 million ($576 million Canadian) a year by eliminating door-to-door delivery to urban homes. 

It also plans to eliminate 6,000 to 8,000 jobs during the next five years, mainly through attrition. The postal service expects nearly 15,000 employees to retire or leave the company in the next five years. Canada Post employed 68,000 at the end of the 2012 fiscal year. 

The company's core mail operations have been losing hundreds of millions of dollars per quarter for several quarters in a row. 

Canada Post said if left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers. 

"What Canadians expect from their postal system is changing dramatically. That requires an equally dramatic change in the size, structure and direction of Canada Post," it said in a report. "Future success will require a leaner workforce, more competitive wages and benefits and greater flexibility." 

The U.S. Postal Service has also struggled in the past few years. It has waited for years for legislators to pass a bill to fix its ailing finances. In fiscal 2013, it had a $5 billion loss, ending in the red for the seventh year. 

Last month, Canada Post announced that it would ask the Canadian government for financial relief next year to help support a restructuring of its business model and pension plan framework to assure long-term financial sustainability. In addition to service changes, the post is increasing the price of stamps. 

The postal service has faced intense competition from couriers, as well as technology that has led to a growing popularity of consumers paying their bills and communicating online. 

Transport Minister Lisa Raitt, the minister responsible for the corporation, said Canadians are sending less mail than ever, leaving Canada Post with some tough financial decisions in order to combat a steep decline in revenues. 

In the third quarter, Canada Post reported an improved, but still big, pre-tax loss of $102 million ($109 million Canadian) for the period ended Sept. 28. The pre-tax loss in the comparable period a year ago was $136 million ($145 million Canadian). 

Canada Post said the rollout of a new five-point action plan will return Canada Post to "financial sustainability" by 2019. 

A think-tank commissioned by Canada Post earlier this year warned that the postal service was on track to lose $1 billion annually by the end of this decade.