Canadian Manufacturing

Outlook for Canada Post not encouraging if status quo continues, says new report

A paper by the School of Public Policy at the University of Calgary makes several recommendations to improve the mail carrier's performance

CALGARY—A new study is delivering some potential solutions to Canada Post’s woes, including a recommendation that postage rates should vary depending on where the mail is going.

The paper by the School of Public Policy at the University of Calgary says the outlook for the Crown Corporation isn’t encouraging with the status quo.

It notes that the number of letters delivered dropped by nearly a quarter between 2006 and 2013, and the rise in parcels sent to online shoppers hasn’t been enough to offset the decline.

Meanwhile, the number of addresses in Canada is rising by nearly a quarter million a year.

Canada Post charges the same prices to all customers, even though delivery in urban areas is cheapest.

The study recommends Canada Post charge different prices based on the type of sender, the volume and the mail’s destination.

“The reality is that most Canadian mail today is sent by large firms to customers and other businesses. And most mail is delivered in urban areas, where delivery costs are lowest,” wrote the study’s author, Phillippe De Donder, who is with the Toulouse School of Economics in France.

“But because Canada Post is required to charge identical prices to all customers, urban households essentially help subsidize the postage costs of big business and rural recipients.”

De Donder said that while immediate privatization to Canada’s postal service may not be the solution, he recommends introducing more free-market competition in the sorting and transportation of mail and setting up an independent regulator to oversee the reforms.

In 2013, Canada Post announced plans to phase out door-to-door delivery in a bid to cut costs and install community mailboxes instead. Shortly after taking power in October, the Liberal government put that process on hold, meaning some households have seen their service unchanged while others have made the switch.

De Donder said one scenario could be an extra annual fee for door-to-door service.

Related Posts from the network