Canada Post proposes above-inflation postal rate rise
Canada Post has said postal rates for domestic letters will rise by an above-inflation 2.7% next January. The Crown Corporation issued a notice to the Canada Gazette formally setting out increases for domestic, US and international letter mail items as well as domestic registered mail, effective January 16, 2012.
As well as the 2.7% hike in domestic letters, Canada Post wants to increase US-bound letter rates by 2.2% and international letter rates by 2.8%.
Registered mail would see rates rise by 1.9%.
Basic stamp rises will go up from 59c to 61c. Under Canada Post’s five-year rate rise plan, as announced in 2009, stamp prices are also expected to rise by a similar amount in both 2013 and 2014.
The postal rate rises proposed for 2012 include:
- $0.02 increase to $1.05 for domestic letters up to 50g in weight;
- $0.02 to $0.15 increase for all other domestic letter weight categories, with the heavier categories incurring the larger increases;
- $0.02 increase to $1.05 for letters, cards and postcards up to 30g destined for the USA;
- $0.05 increase to $1.80 for letters, cards and postcards up to 30g sent to foreign destinations;
- $0.15 increase to $8.25 for domestic registered mail.
As well as the expected 2.3% inflation in 2011 and 2.1% in 2012, Canada Post said the postal rate increase was needed to cope with the financial pressures from the recent recession, declining letter mail volumes, competition from internet communications and the need to modernise its infrastructure through its $2.1bn Postal Transformation programme.
Canada Post insisted the rate rises were “modest”, reflecting its processing costs.
“Canada’s domestic letter rates would continue to compare favourably with those of other industrialised countries, despite the country’s vast geography, low population density and harsh climate,” it said.
While Canada Post has remained profitable for 16 consecutive years, it said mail volume declines represent a “significant business risk” going forward. Close to half of Canada Post’s revenues stem from domestic letter mail, with volumes decreasing while the number of Canadian addresses increase by around 200,000 each year – adding to costs.
Laying out the burdens from its proposals, Canada Post said that for the average household there would be a “minimal” impact, while even large businesses would only see costs rising by around $1,500 a year for letter mail.
Stakeholders now have 60 days in which to formally comment on the proposals.
As a retired Postal Inspector from this once venerable institution, I believe one of the main issues for a company that is mandated to serve the expanse of the country, is the balance between providing such service at a reasonable cost. Therein lies the problem.
There is only one profitable geographic area served by CPC being the Windsor-Quebec corridor. Historically when mail volumes were high and when CPC had exclusive privilege for international-bound mail, these revenues were used to offset the losses incurred in the remote parts of the country.
Thus with declining volumes and the loss of the exclusive privilege internationally (by Mr. Harper et al), the conundrum is whether the expectation for an annual profit or in the very least break even is reasonable. In otherwords is it acceptable to revert back to the pre-corporation era when service was ‘job one’ while sustaining operating losses?
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