What Happened?
The Canadian Postal Service recently announced home delivery of the mail will be phased out over the next five years, as postal rates continue to climb. Canada Post will also be eliminating 8,000 jobs as the agency combats rising wages and pension costs amid declining mail volumes.
The Goal
Similar to the United States Postal Service, Canada Post is struggling to stay afloat financially. The agency has a mandate requiring it to fund all operations through profits and not become a burden on taxpayers. As a result, Canada Post has created a five-point plan to cut down on costs and transition operations back into the black, The New York Times reported.
Canadian residents will pick up their letters and packages at community mailboxes once home deliveries end. Simultaneously, the price of sending items through Canada Post will increase significantly to help boost revenue. The price of a stamp booklet, for example, will jump from 63 cents to 85 cents.
Despite the growing popularity of online shopping, the jump in parcel volume is significantly less than the decline in letter volume as more communications and bills are being sent electronically now. Between 2008 and 2012, Canada Post reported a 23.6 drop in the number of mail pieces passing through the agency. Canada Post currently faces a $6.5 billion pension fund shortfall and is expected to bleed $1 billion annually by 2020 if operations remain consistent with current practices.
What’s The Plan?
Canada Post’s Five Point Action Plan aims to cut down on costs significantly while continuing to meet the postal service needs of Canadian residents. Because the agency refuses to be funded by taxpayer dollars, Canada Post outlined five steps to achieve financial independence and sustainability:
1. Community mailboxes
The remaining one-third of Canadians who still receive their mail at their homes will be converted to community mailboxes over the next five years. Each home will have an individual, locked compartment for all deliveries.
2. New pricing structure
A new tiered pricing structure will be enacted based on the cost of servicing the delivery.
3. Postal franchises
Opening more franchise postal outlets in stores through local retail business partnerships will enable Canada Post to service communities more effectively on a smaller scale.
4. Streamlined operations
Canada Post is upgrading its technology while consolidating certain processes to increase efficiency and reduce costs.
5. Cost of labor adjustments
Attrition and collective bargaining will lower Canada Post’s cost structure, while the pension plan will be reformed to be more sustainable.
Canada Post believes the sooner it can get its own costs lowered, the easier it will be to maintain high quality service for residents.
U.S. Next?
Although it operates differently than Canada Post, the U.S. Postal Service is facing similar financial hurdles as volumes drop and pensions rise. The National Academy of Public Administration published a report on a possible public-private hybrid postal system that would partially privatize two-thirds of the agency – its retail and processing branches. The remaining third, delivery network processes, would remain under government control.
Privatize It Up!
Gov1 has followed privatization of several local government activities including IT departments and airport operations.