Canada Post $1B loss, Falling mail volumes will result in Canada Post losing a billion dollars a year by 2020, the Conference Board of Canada said Tuesday in a report that suggests some controversial ways the Crown corporation could address the problem.
The Conference Board report, which was commissioned by Canada Post, estimates that the postal system's total volume of mail will drop by more than 25 per cent within the next seven years. Only parcel volume is expected to rise as e-commerce continues to grow in popularity. But the report says the growth in parcel business will not make up for the loss in revenue from other lines of business.
Almost half of all Canadian households send no more than two pieces of mail each month, the report notes.
"E-commerce is boosting demand for parcel delivery, but households are sending fewer letters, businesses are encouraging electronic bills, governments are moving to direct deposit, and advertising is moving to the internet," says David Stewart-Patterson, the report's lead author and the board's vice-president of public policy.
"Canadians must consider what kind of postal service they really need in the years ahead."
The Conference Board notes that Canada Post recorded profits for 16 consecutive years — until 2011's deficit — by improving efficiency and bringing in regular price increases at or below the rate of inflation. Those days of black ink are over, it says.
Canada Post last week said it was facing "serious financial challenges" this year because of a growing number of new addresses along with rapidly declining mail volumes. The corporation said it is expecting a "substantial financial loss in 2013."
It's a scenario facing postal systems around the world. Last week, the U.S. Postal Service reported an annual loss of $15.9 billion US. It had proposed dropping Saturday delivery but abandoned that plan following Congressional opposition.
Raising the cost of mailing letters and advertising could help to cut Canada Post's future shortfall, the report says, but it won't eliminate it. Even boosting mail costs by 10 per cent a year starting in 2014 would still leave an operating loss of more than $600 million by 2020.
Canada Post $1B loss news
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