7 things to know about Canada Post’s plan to axe home delivery

Above: In 1960  the price of a stamp was 5 cents. Next year it will cost  up to a dollar but as Sean O’Shea reports higher fees and the end of home delivery may not be enough to keep the corporation afloat. 

Canada Post announced Wednesday a dramatic but many say necessary overhaul to be implemented over the next five years in a bid to turn around the struggling postal service. The broad plan calls for the elimination of thousands of jobs, phasing out of home delivery and sharply higher postage rates.

Here’s what you need to know:

Why is mail delivery being phased out?

Obvious to most, once-steady volumes of mail have eroded over the last decade and a half as digital communications have crept into daily life. “As more people began to communicate and manage their household bills online, lettermail volumes declined sharply,” the service said in the announcement.

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Canada Post has been selling off century-old offices and real estate to avoid losses but that’s not a long-term solution. By 2020, Canada Post expects to lose $1 billion annually under its current business model.

Using taxpayer funds to buoy a declining service isn’t an option. “Canada Post has a mandate to fund its operations with revenues from the sale of its products and services, rather than become a burden on taxpayers,” Canada Post said.

The new plan, which will phase out a “significant” amount of costs over the next five years, means the postal service will be profitable or at break-even by 2019.

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But is my home mail delivery being phased out?

Yes. In a dramatic but necessary move, Canada Post is completely withdrawing from home mail delivery by 2019. That will affect about one third of Canadian households which continue to receive mail delivery to their doorsteps.

This move only applies to daily ‘lettermail’ which includes direct-mail flyers and letters (ie, bills) sent through Canada Post. Parcel delivery will still be delivered to your door — it’s a cornerstone of Canada Post’s strategy, actually.

WATCH: Jon Hamilton, Canada Post spokesperson, discusses how Wednesday’s announcement will affect residents.

The postal service says it will be setting up community mailboxes in older neighbourhoods where they don’t exist. Many newer housing developments already have community mailboxes.

“This change will provide significant savings to Canada Post and will have no impact on the two thirds of Canadian households that already receive their mail and parcels through community mailboxes, grouped or lobby mailboxes or rural mailboxes,” Canada Post said.

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When will home mail delivery stop?

For some neighbourhoods, beginning in July of next year. The transition is expected to take five years to fully implement. Specific neighbourhoods where delivery will cease first weren’t disclosed by Canada Post.

What happens to the mail man?

The new plan requires Canada Post eliminate between 6,000 and 8,000 mail delivery personnel over the course of the restructuring.

Thankfully, with an average age of 48 among its workforce, the service said it expects 15,000 workers to retire over the next five years meaning no layoffs are immediately required. Unfortunately for those retiring workers, Canada Post says it is seeking to renegotiate pension obligations as part of the new plan.

The pension issue is a significant one, with the postal service posting a big shortfall in what it owes its plan. As part of the restructuring, Ottawa will step in to provide temporary relief, including a $1 billion payment to the fund next year.

READ MORE: The journey of a holiday package at a Canada Post plant

What happens to stamps?

Prices are moving up as of March 31. Stamps purchased in booklets will cost 85 cents apiece, up from the present 63 cents now for a domestic stamp on mail weighing up to 30 grams. For individual stamps, the cost moves to a full $1. The average Canadian household buys two stamps a month, Canada Post said.

WATCH: Trudeau frustrated by lack of consultation on Canada Post overhaul

What happens to the weekly flyers?

Many retailers like grocery and department stores, continue to use home delivery to market themselves.

But many are also becoming increasingly savvy at efforts to use email services and smartphones to inform customers of sales, even using the newer technologies to customize products to individual buyers. Those efforts will only grow with increasing speed over the next five years, while flyers will also continue to be sent through Canada Post to individual households via community mailboxes.

Will Canada Post eventually go out of business?

Not likely. The five-year plan is aimed at re-positioning Canada Post into a parcel delivery service like private sector competitors such as UPS and Federal Express.

Canada Post’s parcel delivery business is its fastest growing division and has helped offset losses taken from the decline of its traditional mail business in recent years. As e-commerce shopping continues to grow, door delivery of packages will too and Canada Post aims to compete indefinitely in that business.

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Global News has complete coverage of the Canada Post announcement.