2023 Annual Report

Meeting the challenges of
serving a changing Canada

Canada Post has a responsibility to serve all Canadians and operate in a financially self-sustaining manner, based on revenue generated by the sale of postal products and services, not taxpayer dollars. The 1985 Canada Post Corporation Act created the postal system as we know it today. It was designed to run as an arm’s-length organization.

Both before and after the Act was implemented, successive governments introduced numerous reviews and regulations impacting Canada Post. These measures were intended to ensure Canadians across the country would be well served by their postal service. In the paper-based economy of that era, we fulfilled these requirements.

The country we serve today is not the country we served in 1985. While the mailing and delivery needs of Canadians have changed significantly and continue to evolve, the regulatory approach has not kept pace. Canadians expect Canada Post and the government to work together as stewards of the national postal system, ensuring that it evolves to meet their changing needs.

As we move forward, it is important we work together to change the postal system to better reflect what Canadians need, where they live, how they shop, and how they use the postal service. A regulatory approach that provides the flexibility to do that, while ensuring the proper checks and balances are in place, would provide the foundation to secure the postal service for generations.

Canadian Postal Service Charter

The Canadian Postal Service Charter reaffirms the government’s commitment for Canada Post to operate in a financially self-sustaining manner, while meeting the obligations and expectations set out in earlier directives. The Charter is required to be reviewed by the government every five years. It was last done in 2018.

When the Charter was established in 2009, mail had started to decline but there was still enough volume to cover the cost of meeting these expectations. Today, we’re operating in a completely different environment and we’re no longer able to cover these costs.

The rapid changes in our current environment have outpaced the regulatory approach, adding to the substantial pressures on our business. A modern postal system would be better positioned to address some of the growing issues we’re facing across the country.

Protecting service for truly rural areas

Over the past three decades, demographics have changed and urban sprawl has accelerated. Areas that were rural in the 1990s are now urban, as housing developments, retail outlets and other services spread out, creating suburban communities. We respond to these changes every year, expanding our network to serve new addresses and new neighbourhoods. Since 2006, we’ve added more than three million new addresses to our delivery network.

With Canada expecting an extended housing boom, it’s time to update the regulatory requirements put in place in 1994 that cover rural post offices to ensure they reflect the last 30 years of urban sprawl. Today, these requirements apply to many communities that were once rural but are now clearly suburban with more service options nearby.

An updated approach would help the Corporation invest and maintain services, with a greater focus on underserved rural and remote areas, far from the urban centres.

Serving the needs of a changing urban Canada

The housing surge is going to be felt in every corner of the country. Canada Post will serve every new address, as is our long-standing duty under the Universal Service Obligation (USO). Urban communities, in particular, will change significantly as intensification and infill housing continue across the country.

It’s crucial that Canada Post prepares for the changing needs of busier urban neighbourhoods experiencing an accelerating number of new addresses. Adding more addresses to a delivery network largely built for letters is not a solution to the challenges ailing the postal system – it will only exacerbate the problem. Canadians are using the postal system differently and, each year, rely less on letter mail delivery. We need to change how and when we deliver to better reflect this behavioural change.

The number of addresses grows each year...

The number of addresses served by Canada Post grows annually, with a 1.9M total increase since 2014.

... as letter mail per address declines

There’s been a 49% decline in the number of letters received per address since 2014.

Find a data table for our Address growth infographic and a data table for our Letter mail decline infographic on our page, Delivery reach and letter mail data.

At the same time, we continue to work collaboratively with our bargaining agents to achieve greater flexibility in the way we deliver. Our current delivery model is rigid and not built to easily respond to the changing needs of the country. Delivery routes are based on a set number of addresses to visit, rather than volume delivered.

The model also sees the company incur significant overtime costs when providing evening and weekend delivery services, which have become an industry norm. Canadians expect the postal service to provide cost-effective, seven-day-a-week services that meet their needs and expectations.

Pricing that reflects the cost of providing the service

The USO mandates that Canada Post serve all Canadian addresses. It has been our long-standing duty and remains one of our greatest points of pride. To pay for it, we were granted the exclusive privilege – a monopoly – to deliver letters to households at a price that would cover the cost. For decades, this exclusive privilege helped cover the USO expense and enable our financial self-sustainability.

Today, the exclusive privilege to deliver letters does not generate enough revenue to cover the increasing cost of providing the service.

The current regulatory approach does not provide enough flexibility to price stamps and mail products at rates that keep pace with the consumer price index (CPI) and cover the cost of delivering the mail. Our delivery costs have increased due to inflationary pressures and the growing number of addresses served.

We need to work closely with the government to set stamp and letter mail prices that cover the cost of delivering mail to all Canadians. Connecting the country remains as important as it did when the USO was put in place. But declining mail volumes and increased costs have led to a financial imbalance, with major impacts on the postal system and Canadians.

In February 2024, Canada Post proposed postage rate increases, as published in the Canada Gazette. The new rates, which would take effect May 6, 2024, subject to Governor in Council approval, are helpful but do not cover the cost of providing the service. Prior to these proposed changes taking effect, domestic letter mail rates have increased twice over the last decade (five cents in 2019 and two cents in 2020), with the last major pricing change made on March 31, 2014.