Thursday, 12 April 2012

Canada Post


~ Wyland Milborne & Olivia Lin~

Overview of Canada Post

Canada Post was created to provide a standard of postal service that meets the needs of people in Canada.  It is the national postal service of Canada and is an enterprise owned by the Canadian Federal Government. It currently has a monopoly on all letters weighing less than 500 grams travelling within the country. Starting in 1867, following confederation, Canada Post was created by the Dominion of Canada. 

Legal Barriers: Licensing 

  •  Canada Post is a crown corporation owned by the federal government. 
  • Private firms looking to deliver mail inside Canada need to be licensed by the Federal Government unless legal guidelines are followed. Implemented by the Canada Post Corporation Act that passed in 1981 by parliament. 

Economies of Scale

  •  Private companies can deliver “letters of an urgent nature” if they charge at least three times Canada Post’s regular rate of postage for a 50-gram package. 
  • Will undercut new entrants because legally Canada Post can sell at a lower price and still earn a profit. 
  • Private firms looking to enter the market will have significant difficulties due to start up costs/financial obstacles that the government has put in place in order to protect the Canada Post monopoly.

Pricing Strategies

  • Canada Post has aggressive pricing compared to private firms offering parcel services. 
  • The 2012 rate is 61 cents for a standard letter (30 g or less) and $1.05 for a letter between 30 g and 50 g. Rates increase in mid-January of each year; for ordinary letters. The rate is regulated by a price-cap formula linked to the inflation rate.

Control of Essential Resources

  • Canada Post purchased Purolator, a competing courier company. This branch of Canada Post is the leading overnight courier company in the country and contributed 18.8 percent of Canada Post’s revenue. 
  • Canada Post has over 6,500 post offices that serve over 15 million addresses in Canada. 

Maintenance of Monopoly Power

For nearly 30 years, Canada Post has retained its monopoly power on all mail weighing 500 grams or less traveling within the country.  It has been able to maintain its significant presence in express services.  Canada Post has been run by, supported, and protected by the government.
In addition, by Canada Post upholding its values it has been able to survive as a monopoly.  These criteria are as follows:
·         Universal Service
·         Affordable Rates
·         Frequent and Reliable Delivery
·         Convenient Access to Postal Services
·         Secure Delivery
·         Community Outreach and Consultation
·         Reports on Performance
·         Reviewing of the Charter
(The charter states Canada Post’s expectations regarding its service standards and related expectations.)

Future of Canada Post

Increasing popularity of e-mail and digital transactions poses a challenge for Canada Post. Canada post implemented an electronic alternative called E-post to compensate for the decrease in letter mail. E-post allows customers to pay bills, view statements, and receive payments through Canada Post. 
Each year, Canada Post adds about 200,000 addresses to its delivery list. The number of pieces delivered per address has declined 17.2 percent over the last five years. The combination of decreasing volume and increasing costs represents a significant challenge.


Bibliography 


"Index of Postal Freedom." Consumer Postal Council. N.p., n.d. Web. 10 Apr 2012.    
<http://www.postalconsumers.org/postal_freedom_index/Canada_--_Canada_Post.shtml>.
"Canadian Postal Service Charter." Transport Canada. Government of Canada, 02102012. Web. 10 Apr
2012. <http://www.tc.gc.ca/eng/mediaroom/infosheets-canadapost-1770.htm>.
"Canada Post." Canada Post. Canada Post Corporation, n.d. Web. 11 Apr 2012.
<http://www.canadapost.ca/cpo/mc/default.jsf>.

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