Businesses lament increase in stamp prices
By: Viola Pruss
| Posted: Saturday, Dec 14, 2013 06:00 am
Canada Post expects to save $200 million in coming years by changing its delivery service, cutting employee numbers and hiking the cost of postage stamps.
But some local business owners say these changes – especially the hike in stamp fees – will be felt on their end, mostly through increases to their customer fees.
“It’s death by a thousand cuts. It is just one more increase and it’s personally very frustrating as a small business owner,” said Dar Schwanbeck, managing director for the Northern Alberta Business Incubator. “We run the incubator in St. Albert as a small business and it’s not easy to keep passing on these costs to the customer.”
Canada Post announced this week that it will be ending its door-to-door mail delivery in 2014, transitioning to community mailboxes, and eliminating 6,000 to 8,000 jobs over the next five years.
It will also raise the cost of a single stamp from $0.63 to $1. Stamps bought in packages or coils of more than 10 will cost $0.85 a stamp, while the cost of postage metres (stamps printed on envelopes) will be $0.65.
Schwanbeck said his organization spent about $600 on postal services in the past year. Next year, that cost will rise to $1,000.
“A $400 increase doesn’t sound like much but … I like us to find ways to make numbers smaller instead of bigger but we just all keep on passing on these costs,” he said.
Majority of small businesses still use postal service
A recently-published survey by the Canadian Federation of Independent Business suggests that 40 per cent of small businesses send at least 50 pieces of letter mail per month, and 98 per cent use letter mail on a monthly basis.
Most of these business owners are not overly concerned with the change to the delivery service but worry about the hike in fees, said Amber Ruddy, policy analyst with the federation.
“The massive hike in the fee is something that will definitely be a challenge, especially with the vast majority of them relying on invoicing, business-to-business transactions and that kind of thing through the mail,” she said.
Ruddy added that many of their members felt that changes to the postal service could have been avoided if Canada Post lowered the costs of labour and benefit plans of its employees.
Postal workers earn about 40 per cent more than public sector workers, she said.
“If Canada Post is serious about wanting to aggressively reform the business and run it more like a business they would address these issues first,” she said. “Because no business owner in their right mind would say to their customers you have to pay more and you are getting less.”
But Canada Post said it also consulted with business owners in 46 communities across the country before implementing its changes, said spokesperson Jon Hamilton – and those business' main priority was keeping the postal service going on five days a week.
More electronic mail in the future
As fewer people use letter mail and more businesses use electronic means to deliver bills and statements, Hamilton said Canada Post had to make changes to its delivery system to continue its services in the future.
“We maintain five day a week service but at the same time we need to ensure that the cost of postage reflects the cost of serving Canadians,” he said. “It’s a difficult decision but we had to increase the price of stamps.”
Hamilton added that a lot of businesses now use postage metres that print the stamp on an envelope rather than using a paper stamp. Those stamps cost less than a regular, paper stamp ($0.65) because they are easier for Canada Post to process.
“Modern, automated machines like that kind of mail. It’s not processed manually so it’s a lower cost so that’ll be a lower cost (to businesses) as well,” he said. “It’s an increase, we get that, but it’s a tiered approach.”
Ruddy said she expects that Canada Post competitors such as FedEx or Purolator may start exploring more cost effective and efficient services now.
More businesses may also change to electronic mail over letter mail delivery, such as Jodie McFadzen with Penzen Limited, a local bookkeeping service.
McFadzen said she already rents a mailbox at the UPS store, so changes to the delivery service won’t affect her. The hike in stamp fees will though, she said.
“But I can invoice them through email to eliminate that,” she said. “I get a lot of mail that comes to me but I don’t send out a lot of mail.”
Schwanbeck said much of his business already runs electronically but not all small businesses have the option to change services around, given the cost of labour and the time it consumes.
“By the time you study all this stuff you spend $4,000 instead of $400,” he said.