With Canada Post announcing it is phasing out urban home delivery, we turned to Associate Professor Harish Krishnan, Director of Sauder’s Centre for Operations Excellence, for perspective on what this means for the industry. Krishnan explains the implications on the future of snail mail in Canada.
Q: What do you think the impact of Canada Post’s announced changes might be?
A: While letter volumes are declining, there is the opposite trend in parcel volumes. The changes announced by Canada Post are likely to accelerate the declining trend in letter mail (letters, bills, etc.), as the elimination of door-to-door delivery will reduce customers’ reliance on letter mail. The changes may, however, position Canada Post to take advantage of the increasing trend in parcel deliveries.
Q: Why do you think Canada Post was forced to make the changes that they have?
A: Providing door-to-door delivery service is expensive. A large part of the cost is in the “last-mile,” which refers to the movement of the product from a centralized location (e.g. a transportation hub) to a customer’s doorstep. If demand for last mile delivery declines, it will become harder for Canada Post to justify the investment in labour and other assets necessary to support last mile delivery.
Q: Do you think this is the beginning of the end of snail mail in Canada?
A: No. As more customers shop online, there is likely to be much greater demand for home delivery of parcels. The US Postal Service has recently signed a deal with Amazon.com for Sunday delivery of Amazon’s parcels.
The challenge with parcel delivery, however, is that unlike letter mail, it is often not possible to leave the parcels when there is no one at home to receive the parcel. Canada Post’s move to community mailboxes may allow it to benefit in two ways: (1) reduce unprofitable door-to-door delivery of a declining volume of letter mail; (2) increase delivery of parcels, by providing a convenient way for customers to receive the parcels at a community mailbox.