OTTAWA Dec 11 Canada's postal service will
phase out urban home delivery within five years and hike the
cost of postage stamps to try to stem soaring losses, the post
office said on Wednesday.
Canada Post, like the U.S. Postal Service, is suffering as
customers switch to digital communications. In August it said it
was on track to run short of cash by the middle of 2014 unless
major changes were made.
The government-owned corporation - which has a mandate to be
self-financing - last month reported a third-quarter loss of
C$109 million ($103 million) before tax and said mail volumes
had fallen 7.3 percent from the same period in 2012. It must
also deal with a C$6.5 billion deficit in its pension plan.
About 5.1 million urban households in Canada - a third of
the total - get door-to-door mail delivery. Under a five-point
plan unveiled on Wednesday, this will be phased out over the
next five years and replaced by a system of community mail
"With the ongoing decline in letter mail - we delivered a
billion fewer pieces of mail in 2012 than we did in 2006 - we
had to make changes," spokesman Jon Hamilton said.
"(This plan) really provides Canada Post with a future based
on serving needs that Canadians have rather than trying to put
something together than doesn't work."
The opposition New Democratic Party (NDP) said the move
could harm pensioners who rely on home delivery in winter
"There is no doubt there are negative impacts on service
across the country and, of course, thousands of jobs lost," NDP
Member of Parliament Peter Julian told reporters.
The corporation reports to Parliament through Conservative
Transport Minister Lisa Raitt, who said in a statement she
supports Canada Post's efforts to cut its losses.
Canada Post employs around 55,000 people and the changes
will involve a cut of between 6,000 to 8,000 staff, mainly
"With its current labor costs, Canada Post has a much higher
cost structure than its competitors in the private sector have.
This is simply not sustainable," the corporation said in a
The average annual cost of delivering mail to an address is
C$283, compared with C$108 for a community box.
The cost of a single stamp for mail delivery in Canada will
rise to C$1 from the current 63 Canadian cents. Such stamps
bought in rolls or booklets will cost 85 Canadian cents each.
Canada Post will also open more franchise postal outlets in
stores, streamline its operations by using modern technology and
cut labor costs. The measures combined are designed to save
C$700 million to C$900 million per year.
Canada Post said the changes would return it to financial
sustainability by 2019.
The Canadian Union of Postal Workers said it would react to
the corporation's plan later in the day.
Separately, the Canadian government said it would give
Canada Post a four-year break from the requirement to make
special payments to its employee pension plan to address its
Canada Post had been due to make a special payment of C$1.1
billion in 2014.
(Editing by Jeffrey Hodgson and Peter Galloway)