Canada Post Responds to Cost Pressures with 2009 Pricing Strategy
In response to rising cost pressures, Canada Post is proposing an amendment to the Letter Mail Regulations to establish the rates of postage for domestic Lettermail for the next three years. The domestic Lettermail rate would increase from 52 to 54 cents in January 2009. The rate would rise by two cents per year in the following two years. Even after these rate increases, Canada will continue to enjoy the 3rd lowest rate of postage in the developed world.
Under the current Letter Mail Regulations, increases in the domestic basic letter rate have been restricted by a price-cap formula that limits increases to two-thirds the rate of inflation as reflected by the Consumer Price Index (CPI). The CPI has increased 14.5 per cent since 2002, while the price of a basic stamp has gone up only 8.3 per cent or 4 cents. This does not adequately reflect Canada Post’s costs in operating the postal service – in particular rising costs for labour, fuel and transportation.
Other rate adjustments for regulated products announced in the Canada Gazette include a 2-cent increase to 98 cents for letters, cards and postcards up to 30g destined for the USA; and a 5-cent increase to CAD 1.65 for letters, cards and postcards up to 30g to foreign destinations.
Price adjustments will also be applied to non-regulated products. Publications Mail rates will increase by an overall weighted average of 3.1 CAD along with the introduction of a distance-based Letter Carrier Pre-sort price structure. Canada Post will also introduce a new formula to calculate the existing Parcel Fuel Surcharge.
1 CAD = 0.991926 USD
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