(Photo: Harish Krishnan)
CANADA Post announced that it plans to cut door-to-door service to urban centres across the country. Harish Krishnan, Sauder Associate Professor in Operations and Logistics Division and the Director of Sauder’s Centre for Operations Excellence Research Centre, discusses the implications of the decision.
What do you think the impact of Canada Post’s announced changes might be?
Krishnan: 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 it. The changes may, however, position Canada Post to take advantage of the increasing trend in parcel deliveries.
Providing door-to-door delivery 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 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 it.
Do you think this is the beginning of the end for “snail mail” in Canada?
Krishnan: No. As more customers shop online, there is likely to be much greater demand for home delivery of parcels. The US Postal Service 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: reduce unprofitable door-to-door delivery of a declining volume of letter mail, and increase delivery of parcels by providing a convenient way for customers to receive the parcels at a community mailbox.