By: Derek Locke General Manager

Changes at Canada Post a Wake-up Call for Local Government

None of us should be surprised by the cost cutting initiatives announced by Canada Post last week. For those that have not heard, the price of a postage stamp is set to increase by no less than 35% from current rates at the end of March in conjunction with other cost saving initiatives like the phased cancellation of door to door mail delivery. The latest quarterly financial results for the Crown Corporation showed a net loss of $109 million, adding fuel to a recent report by the Conference Board of Canada that declining  mail volume would result in Canada Post losing a billion dollars per annum by the year 2020. The facts are simple; In 2006 Canada Post delivered 5 billion pieces of domestic mail. By 2012 that number had declined to 4 billion. When your core source of revenue drops by 20% overnight, with no end in sight, it is impossible to maintain business as usual.

cp.pngThe situation in Canada mirrors what is happening in other parts of the World. The US Postal Service announced an annual loss of 15.9 billion dollars last April and has been bleeding money for years. In Britain, the Royal Mail privatized this year after being plagued by years of mounting financial losses. Conventional mail delivery has been eroded by a “disruptive technology shift” towards electronic messaging & devices.  Similar disruptive technology shifts have killed mainstays like Kodak and Blockbuster in years past and there is no reason to believe that Canada Post is on safe footing, even after last week’s announcement. Disruptive technologies impact businesses every day and are challenging to overcome because they offer something that is simpler, cheaper, more reliable and convenient that existing methods. For Canada Post, the move towards electronic bill payment and various forms of electronic communication is leading to a steady and predictable decline in the volume of domestic mail. People do not want to go through the effort of sending out written hard copy correspondence anymore, when electronic communication is much quicker and easier.

For municipalities, it is time to accept the inevitability of e-billing and evaluate the efficiencies that can be gained through electronic forms of communication. After March 31st, the average cost per piece of mailed correspondence will be at minimum $1 dollar, after factoring in postage, labor and other overhead associated with sorting, stuffing envelopes and the like. For a municipality sending out 5,000-10,000 tax bills each year and various Pet Licenses, Business licenses, Renewal notices, etc. – the costs add up quickly. The other reality to consider is that an 85 cent stamp should not be mistaken for a ceiling, as Canada Post may need to consider future increases to stem the tide of their shifting business realities.

The time is right for all municipalities to consider what their future looks like in terms of e-billing and electronic correspondence with constituents. The world has changed and conventional mail delivery is quickly losing ground to more effective methods of communication. Time to make some hard choices about what is in the best interests of your community. Lower costs, less work and timely communication with constituents sounds good to me – how about you?