Postage hike hits the bottom line

Business advocacy groups say a jump in postage rates will hurt many of their members.

Business advocacy groups say a jump in postage rates will hurt many of their members.

On Monday, the cost of mailing a first-class letter in Canada rose to 85 cents from 63 cents, based on the price of a book of stamps. For stamps purchased individually, the cost increased to $1.

Canada Post Corp. announced the price increases in December, along with several other measures designed to reduce the losses that the Crown corporation is suffering as mail volumes decline.

“While we understand the pressures that forced Canada Post to make this decision, the 35 per cent price hike is a substantial cost increase that will directly impact the bottom line of many businesses,” said Reg Warkentin, policy co-ordinator with the Red Deer Chamber of Commerce. “It’s an unfortunate occurrence that reflects the realities of reduced letter-mail volume and will result in unavoidable cost increases for businesses across the country.”

Warkentin noted that the Chamber sends out about 400 pieces of mail per month, which is a fraction of what many other business entities entrust to Canada Post.

Servus Credit Union, for example, mails out millions of items annually, confirmed Wade Bendfeld, the financial institution’s public relations manager. An increase in the associated cost could take a bite out of the money available to Servus’s members through its profit-sharing program, he said.

“When it comes time for profit-sharing, we don’t want increased operating costs from something like postage to affect that.”

Many Servus members are able to forego monthly paper statements by opting for electronic statements — a service that will be available to Red Deer members as of May 19.

But other businesses don’t have easy alternatives to mailed letters, said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).

“From connecting with customers to invoicing or paying suppliers, the need isn’t going away any time soon.”

The CFIB has calculated that 98 per cent of small firms in Canada send letters as part of their business operations. A recent survey of its members found that 40 per cent send at least 50 pieces of letter mail per month, and 91 per cent consider mail delivery to be important to their businesses.

Instead of increasing letter rates, the CFIB wants Canada Post to reduce costs. Specifically, it proposed in an open letter to federal Transport Minister Lisa Raitt that the wages and benefits Canada Post provides to its employees be reduced so they’re “more in line with private sector standards.”

It also wants Canada Post to reconsider, or at least phase-in, its price increases and for the Canadian government to remove Canada Post’s monopoly over domestic letter mail by allowing competition into that market.

Anick Losier, a spokesperson for Canada Post, said her organization is sensitive to the needs of business and has listened to organizations like the CFIB. It’s structured its rates to favour big users, she said, with those that use postage meters paying 75 cents a letter, and those that process their own letters paying 70 cents and even less.

Losier added that those with a VentureOne card, which Canada Post designed for small business customers, can receive a five per cent discount on stamp purchases for the remainder of 2014. The same applies to meter customers.

She said reducing the cost of labour and benefits is part of Canada Post’s action plan.

“That’s going to take time.”

Losier said Canada Post’s monopoly has already been eroded by Internet services, and that its public mandate requires it to cover its costs from revenues.

“While we understand this was a drastic, one-time hike, it was really becoming necessary in order for us to reflect what it costs to bring that letter from coast to coast.”

The price of letter delivery in Canada remains reasonable, she said, especially considering the size of the country and the fact Canada Post delivers to 15.3 million addresses.

“Regardless of that price, we’re still in the mid-range of G8 countries when you’re talking about stamp prices.”

In addition to price increases, the other components of Canada Post’s “action plan” are conversion of home delivery services to community mailbox delivery, the use of more franchised postal outlets in stores, streamlining of operations and reducing labour and pension costs.

hrichards@bprda.wpengine.com

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