Canada's postal service said today it will phase out home delivery within urban centers within the next five years as it begins to post significant financial losses due to growing use of digital communication.
Canada Post, a government corporation, said it will replace foot delivery with community mail boxes. About a third of Canadian homes still receive mail to their door.
A Conference Board of Canada study estimated savings of USD 542 million a year by eliminating door-to-door delivery to urban homes.
It also plans to eliminate 6,000 to 8,000 jobs during the next five years, mainly through attrition. The postal service expects nearly 15,000 employees to retire or leave the company in the next five years. Canada Post employed 68,000 at the end of the 2012 fiscal year.
The company's core mail operations have been losing hundreds of millions of dollars per quarter for several quarters in a row.
Canada Post said if left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers.
"What Canadians expect from their postal system is changing dramatically. That requires an equally dramatic change in the size, structure and direction of Canada Post," it said in a report.
"Future success will require a leaner workforce, more competitive wages and benefits and greater flexibility."
Last month, Canada Post announced that it would ask the Canadian government for financial relief next year to help support a restructuring of its business model and pension plan framework to assure long-term financial sustainability.
The postal service has faced intense competition from couriers, as well as technology that has led to a growing popularity of consumers paying their bills and communicating online.
Transport Minister Lisa Raitt, the minister responsible for the corporation, said Canadians are sending less mail than ever, leaving Canada Post with some tough financial decisions in order to combat a steep decline in revenues.
