Canada to phase out home mail delivery to cut big losses

Wed Dec 11, 2013 2:48pm EST
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By David Ljunggren

OTTAWA (Reuters) - Canada's postal service will phase out urban home delivery within five years and hike the cost of postage stamps to try to stem soaring losses, the post office said on Wednesday.

Canada Post, like the U.S. Postal Service, is suffering as customers switch to digital communications. In August it said it was on track to run short of cash by the middle of 2014 unless major changes were made.

The government-owned corporation - which has a mandate to be self-financing - last month reported a third-quarter loss of C$109 million ($103 million) before tax and said mail volumes had fallen 7.3 percent from the same period in 2012. It must also deal with a C$6.5 billion deficit in its pension plan.

About 5.1 million urban households in Canada - a third of the total - get door-to-door mail delivery. Under a five-point plan unveiled on Wednesday, this will be phased out over the next five years and replaced by a system of community mail boxes.

"With the ongoing decline in letter mail - we delivered a billion fewer pieces of mail in 2012 than we did in 2006 - we had to make changes," spokesman Jon Hamilton said.

"(This plan) really provides Canada Post with a future based on serving needs that Canadians have rather than trying to put something together than doesn't work."

The opposition New Democratic Party (NDP) said the move could harm pensioners who rely on home delivery in winter months.

"There is no doubt there are negative impacts on service across the country and, of course, thousands of jobs lost," NDP Member of Parliament Peter Julian told reporters.   Continued...

A Canada Post employee delivers mail in Ottawa December 11, 2013. REUTERS/Chris Wattie