Canada Post’s decision to raise stamp prices and shift to community mailboxes has sent shivers through small businesses and home offices.
The mail carrier unveiled a series of changes on Wednesday aimed at reversing its losses, including phasing out urban home delivery and reducing the payroll by between 6,000 and 8,000 jobs. The price of a stamp will rise to 85 cents when bought in booklets or rolls, a 35-per-cent increase from the current price of 63 cents apiece.
Canada Post’s stamp price hike will take effect March 31, hitting small companies at a time when there are few alternatives to sending and receiving cheques by mail, says a group that represents small and medium-sized businesses.
Dan Kelly, president of the Canadian Federation of Independent Businesses, called the price increase significant for businesses that rely on the mail system to invoice customers. There are few electronic payment systems in Canada that are affordable and widely used, he said, and billing and receiving payments in the mail remains the lifeblood of many small businesses.
Forty per cent of small businesses send 50 or more pieces of mail a month, and 98 per cent use the mail every month, according to an October survey conducted by the CFIB, which represents 109,000 businesses. Sixty-one per cent of the respondents said receiving mail was very important to their businesses.
“People forget that while we as residents may be relying on Canada Post less, a great deal of business is done through Canada Post, including a lot of business-to-business transactions,” Mr. Kelly said.
Adrian van Wijk, founder of JDI Design Inc. in Vancouver, said he is worried about the changes announced by Canada Post and the cloud of uncertainty in the years ahead.
Mr. van Wijk, who runs a small business that designs products for manufacturers, said his office on the fringes of downtown Vancouver relies heavily on Canada Post to move packages back and forth to freelance designers who work out of their homes.
For instance, his firm has been collaborating on a design for a new remote control, and the team system works smoothly when the freelancers are able to take delivery of smaller packages directly at their home, he said.
“For the person on contract, we can sort things out quickly now. But with community mailboxes, he would likely have to check the postal box and see if my package has arrived,” Mr. van Wijk said, adding that he fears parcel pricing will go up, too.
“The more cost effective that we can ship, the more effective that we are as a small business. We ship prototypes back and forth all the time, and we use Canada Post for cost-sensitive parcels because we would have to pay through the nose to use a custom courier.”
Mr. van Wijk added that his wife, Lena, has been an avid online shopper, and the prospect of losing front-door delivery at their home in the Vancouver suburb of Coquitlam would make ordering from websites less appealing. “It will be an inconvenience,” he said.
Canada Post lost $109-million before tax in the third quarter, as the volume of mail fell 5 per cent year to date. The company hopes to save as much as $900-million a year through the changes. Like mail carriers around the world, the company is losing the fight with faster, modern alternatives such as e-mail.
But electronic payment systems in Canada remain largely undeveloped, Mr. Kelly said. “Many businesses still do depend on Canada Post and will be looking for alternatives now as a result of these huge cost hikes, which will make Canada Post’s problems even worse,” he said.
Mr. Kelly said Canada Post should focus on reducing its labour, pension and benefits costs instead of raising the price of its services, which he predicted will only worsen the Crown corporation’s problems.
The arrival of online shopping and e-commerce has been a great boost to the world’s parcel delivery businesses, including Canada Post and its courier subsidiary Purolator. Canada Post has been increasing its parcel-handling capacity, boosting Web services for online retailers and signing in-bound agreements with other countries, according to a Conference Board of Canada report published earlier this year.
It is unclear if retailers that sell online will stick with Canada Post as it moves to halt most door-to-door parcel deliveries to households.
Jim Bena, vice-president of marketing for UPS Canada, would not comment on Canada Post’s announcement, but said the courier’s 2,500 vehicles and 10,000 employees are well positioned to absorb new volumes.
“We are very, very capable with big jumps in demand, both from a consumer perspective and from a commercial perspective,” he said.