Office Document Strategies Blog

1 Billion Less | Major Changes Coming to Canadian Letter Postage

Posted by Lee Kirkby on Wed, Dec 18, 2013 @ 08:12 AM

In a recent announcement Canada Post has released plans for significant changes to the Canadian letter postage market effective spring 2014.  Following upon the announced rate changes for other categories of mail covered in this blog last week, there will be increases in letter rates as well effective March 31, 2014 following the required regulatory process.

The changes proposed are major departures from past practice and reflect the significant move to electronic communications which has led to a reduction of almost 1 billion letter mail postings by Canadians in 2012.  When the final 2013 numbers come in I would expect that this will see even a great reduction from past volumes.  This reduction has led to substantially reduced revenues for Canada post so they are forced to make changes or their operations will see major losses.

New special postage meter rate.

Among the announced changes are some significant impacts for businesses who use letter mail for their operations.  One of the first pieces to note is that for the first time there will be a lower letter postage rate provided to users who produce their postage through the operation of a postage meter.  Up to this announcement the use of a postage meter did not equate to a reduction in postage rates, however it had other advantages with easier access to large amounts of postage, exact pricing based upon weight, and more security of postage control and use.  With the proposed change there will be a special metered rate of $0.75 for those who generate their postage using a postage meter vs a single stamp rate of $1.00 and a booklet or coil stamp rate of $0.85.   While the ten cent differential is not major it will lead to some savings if your volumes are high enough even after the costs of acquiring a meter.

For the three vendors of postage meters in Canada and their dealers this is a partial answer to one of the most frequent questions that new meter purchasers ask, "Is the postage rate lower with a meter."  The answer will be yes come March 31 2014 assuming all the proposals go through.

Major changes to household delivery  1 Billion Less Major Changes Coming to Canadian Letter Postage resized 600

One of the most significant pieces of the new announcement is the phasing out of individual home delivery in urban centres.  A couple of decades ago Canada Post decided not to extend urban individual home delivery in new developments and instead create Community Mailboxes where individual boxes were mounted for householders to collect their mail.  Existing locations which had previously had home delivery were grandfathered and maintained this mode.  Under the proposals over the next five years this process will change and all urban household delivery will move to a Community Mailbox model.  This can lead to some significant labour savings for Canada Post.  It will be interesting to see if this decision leads to an even further erosion of the letter volumes as people opt for electronic delivery of their utilities and other invoices.

New rates for letter mail summarized

Single Stamp $1.00
Booklets and Coils $0.85
Postage Metered $0.75
Incentive Lettermail $0.70

The above rates are for standard letter sized mail under 30 grams.  The incentive rate is for presorted volume mailings and if done suitable for machine processing there is a further one cent reduction to a $0.69 rate.

US, International and oversized lettermail rates will increase in line with the above schedule reflecting similar discounts for the categories, except there will not be a booklet or coil rate for these.

Another round of rate changes for meter users

Previously Canada Post announced a rate change for all categories of mail except lettermail which will become effective January 13 2014 and we covered the process that meter users should undertake to up date their schedules prior to that date in last week's blog. 

It seems that postage meter users are going to have to go through another rate change process in March to update their devices for the new lettermail pricing schedules as well. Depending upon how your meter contract is structured this could mean an additional processing fee will be charged by your manufacturer.

This latest announcement by Canada Post acknowledges what most business people have known for some time.  There are significant changes in the way that communication and information is being processed.  Invoices are rapidly becoming an electronic process and paper invoices may become almost non existent.  Payments through bank or email transfer are becoming much more common and will soon replace paper checks if the trend continues.

It may not be long before there is no longer a delayed payment excuse by saying "The check is in the mail."  On the other hand the convenience, reliability and familarity of the mailed document or payment will be lost and for many users this will be a challenge to get used to.

The landscape keeps changing and it takes attention and care to stay abreast of the rapid alterations in process.

This Canada Post video summarizes its proposed plan:

What do you think?  Is Canada Post on the right track?  Do you still use stamps and lettermail?  Is a postage meter in your future?

Share your thoughts...

Lee K

Free guide to postage meters Canada download

Sign Up for Office Document Strategies Blog

Video Credit:  Canada Post through YouTube

Topics: Postage meter, postage rates, e-mail, mailing equipment, postage machine