Canada Post is raising the cost of stamps and other postal products by 25 per cent today, a move announced in September, long before a 30-day labor strike further challenged the organization’s already dire financial situation. .
Experts say raising prices will be risky and ineffective.
The Crown corporation says stamps purchased in booklets, coils or sheets, which make up the majority of stamp sales, will now cost $1.24 each, up from $0.99. These price increases receive legislative approval in advance.
A spokesperson said the change “is necessary to better align stamp prices with the increasing cost of providing postal mail service to all Canadians.” Canadian stamp prices are among the lowest in the world, the spokesperson added.
Canada Post has been reporting millions of dollars in losses since 2018. The Crown corporation said it could run out of money in less than a year. Is there any way to save it?
“I don’t know if it’s prohibitive, but it could [disincentivize] a little bit to people,” said Karen McCormick, a Windsor resident who says she rarely sends mail anymore.
“It’s a little strange that they are going up… What difference will it make?”
Canada Post expects the new rates to generate approximately $80 million in additional annual gross revenue in 2025.
But that figure pales in comparison to the $3 billion the corporation has lost since 2018. It says higher delivery costs, along with a growing Canadian population, have contributed to its financial stress. Canada Post’s mandate requires it to deliver to all addresses in the country.
In November, the corporation reported more than $300 million in quarterly losses, which it attributed to the continued loss of its share of the parcel market and, in part, to the financial impact of the strike. The workers have returned to work but are still in negotiations with their union to reach a new agreement.
“It’s going to be a very different organization”
Canada Post has long held a monopoly on postal mail, which, according to the Crown corporation itself, has declined by 60 per cent over the past two decades. Since the pandemic, its market share in the most profitable package delivery business has been eroded by private couriers and delivery giants like Amazon, which rely on cheap labor.
The price increase is a “somewhat dangerous path for Canada Post to go too far down the line of competing one-on-one with the other suppliers because, fundamentally, they won’t be able to do it as profitably as others.” “said Sherena Hussain, an instructor at York University’s Schulich School of Business.
It is not yet clear whether the labor dispute caused an exodus of Canada Post customers.
However, “that market share was available and some of the lower-cost players have been able to offer their services and establish a form of trust when Canada Post wasn’t there,” Hussain said.
“That said, their rates have typically been higher than Canada Post.”
The price increases expected on Monday are a “band-aid” solution that won’t solve Canada Post’s problem, said Ian Lee, a management professor at Carleton University who studies the postal service.
“There is a future. It will be a very different organization. It will be much smaller,” he said.
A future version of Canada Post could be taxpayer-subsidized, he added, serving primarily rural and remote communities, areas not served by private, for-profit post offices that tend to focus on Canada’s major metropolitan areas.
Lee said there could also be a scenario where Canada Post delivers directly to independently owned franchises that exist in grocery stores and pharmacies, rather than delivering directly to homes.
“Loblaws and buyers [Drug Mart] and corner stores are just going to compete aggressively to get those franchises because they’re going to have guaranteed customers coming in the door,” he said.
“It is going to be restructured. The only question is when and to what extent, and what will be the proposal that will be offered when they restructure.”
