Canada Post is hiking its postage prices today. What does that mean for its future?

Canada Post is raising the cost of stamps and its other mail products by 25 per cent today, a move announced in September, well before a 30-day labour strike further challenged the organization’s already dire financial situation.

Experts say the price increase will be both risky and ineffective.

The Crown corporation says that stamps purchased in a booklet, coil or sheet — which make up the majority of stamp sales — will now cost $1.24 each, up from $0.99. Such price increases receive legislative approval in advance.

A spokesperson said that the change “is required to better align stamp prices with the rising cost of providing letter mail service to all Canadians.” Canadian stamp prices are some of the lowest in the world, the spokesperson added.

“I don’t know if it’s prohibitive, but it might [disincentivize] people a little bit,” said Karen McCormick, a Windsor resident who says she rarely sends mail anymore.

“It’s just kind of weird that they would be rising … What difference will it make?”

Canada Post expects that the new rates will bring in approximately $80 million additional annual gross revenue in 2025.

But that number is negligible against the $3 billion the corporation has lost since 2018. It says that higher delivery costs, paired with a growing Canadian population has contributed to its financial stress. Canada Post’s mandate requires that it deliver to every address in the country.

In November, the corporation reported more than $300 million in quarterly losses, which it attributed to the ongoing loss in its share of the parcels market, and partly to the financial impact of the strike. Workers are back on the job but is still in negotiations with their labour union for a new deal.

‘It’s going to be a very different organization’

Canada Post has long held a monopoly on letter mail, which the Crown corporation itself said has declined by 60 per cent in the last two decades. Since the pandemic, its market share of the more profitable parcels delivery business has been eroded by private couriers and delivery giants such as Amazon, which rely on low-cost labour.

The price hike is a “somewhat dangerous road for Canada Post to go too far down the line of competing one-to-one with the other providers out there because, fundamentally, they won’t be able to do so as profitably as others,” said Sherena Hussain, an instructor at York University’s Schulich School of Business.

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It’s not yet clear if the labour dispute led to an exodus of Canada Post customers.

However, “that market share was up for grabs and some of the lower cost players have been able to offer their services and establish a form of trust when Canada Post wasn’t there,” Hussain said.

“That being said, their rates have typically been higher than Canada Post.”

The price increases expected on Monday are a “Band-Aid” solution that won’t solve Canada Post’s problem, said Ian Lee, a management professor at Carleton University who studies the postal service.

“There is a future. It’s going to be a very different organization. It’s going to be much smaller,” he said.

A future version of Canada Post might be taxpayer-subsidized, he added, with service primarily in rural and remote communities — areas not serviced by the private, for-profit couriers that tend to focus on Canada’s major metropolitan areas.

Lee said that there could also be a scenario in which Canada Post delivers directly to independently owned franchises that exist in grocery stores and pharmacies, rather than delivering directly to home addresses.

“Loblaws and Shoppers [Drug Mart] and corner stores will just be competing aggressively to obtain those franchises because they’ll have guaranteed customers coming in the door,” he said.

“It’s going to be restructured. The only question is when and to what extent, and what will be the proposition offered when they restructure?”