Is the Canada Post Postal Code System the best in the world?

By Lee Smith, P.log, B.M., CEO of LSL holding Company.

I was recently on a trip in US and I began thinking about the Postal Code of Canada vs. the Zip Code of the US. Which was the better system in terms of identifying a region and making it easier for Courier companies and individual users to find a specific location. So I did some comparisons.

Interesting facts about the Postal code (wikipedia)

• Implemented from 1972 to 1974.
• There is a theoretical limit of 7.2 million postal codes.
• 830,000 active postal codes represents about 12% of the total.
• Not used are: D, F, I, O, Q or U, and the first position also does not make use of the letters W or Z (In some cases it would make it difficult for the automated system to figure out the letter, as this is used to identified hand written addresses as well as mechanical ones).
• Includes a very special code for the North Pole: H0H 0H0

Interesting facts about the Zip Code (wikipedia)

• Implemented 1963.
• ZIP: Zone Improvement Plan.
• ZIP+4 introduce in 1983.
• There are just over 42,000 ZIP codes being used in the United States.

Ease of use

Reading from right to  it is easy to identify any part of Canada by the first letter in the postal code. Quick what state(s) does the number 3 identify in the US?

What makes up a Postal Code?

Postal District: All the Provinces are easy to identify by the first letter of the postal code. It is very easy to tell whether you after dealing the Newfoundland (A) or British Columbia (V), or somewhere in between. The larger cities of Montreal (H) and Toronto (M) have their own unique postal district in keeping with the large percentage of the population that call these cities home.

Forward Sortation Area. This is equivalent to the first 3 digits of the zip code. It is important to note that the second space in the FSA is very important. It denotes whether this is a urban Postal Code (1-9) or  Rural postal Code (0). As much of Canada can be sparsely populated the rural Postal Code can cover some very large areas geographically. This system allows a rural code to be changed to an urban one if there is a population increase in that area.

Local Delivery Unit. This provides the Postal Code with the great versatility. It allows for the the LDU to identify a block, building, a floor in a building, a suite on a floor in a  building, a customer in that suite, etc… It is all dependent on volume of mail and availability of unique postal codes. With only 12% being used, they have room to grow.

What is a Zip Code

A Zone Improvement Plan (ZIP) Code is the numerical code assigned by the U.S. Postal Service to designate a local area or entity for the delivery of mail. ZIP Codes may consist of 5, 7, 9, or 11 digits, and may refer to a street section, a collection of streets, an establishment, a structure, or a group of post office boxes.

ZIP codes are numbered with; 

• The first digit representing a certain group of U.S. states, 
• The second and third digits together representing a region in that group (or perhaps a large city)
• the fourth and fifth digits representing a group of delivery addresses within that region.

Other uses

As big data becomes more relevant large shippers are finding the Postal Code a great way to triangulate on their customers and provide more specific target marketing. The government has also used the Postal Code for census measurement, electoral boundaries and for allocating resources.  The Zip Code provides a looser, but still functional grouping, and with the +4 allows for finer calibrations of location in the US and Territories.

Canada Post has provided a great tool for those who need to find a Postal Code quickly (postal code lookup )   You just typing in the number and name of the street and it does the rest. Give it a try.

The USPS also has a tool to view Zip Codes. It takes some more effort to get to the final Zip Code. 

Checklist: The Winner is?

Easy to use. Postal Code

Easy to read visually. Postal Code

Easy to expand. Postal Code

Adding new combinations. Postal Code

Look up tool. Postal Code

Conclusion

The Postal Code system is the best fit for Canada. There are others in the world that have used the Alphanumeric system such as Great Britain, Argentina and Australia. The zip code is limited by the having only 10 possibilities in each position, where postal code has 26 possibilities in 3 of the 6 positions. The ZIP plus 4 is one of the ways that the US tried to get the pin point address location that comes with the Postal Code. That takes up 10 spaces for the information versus 6 for the Postal code. It is too late to change the ZIP code but I am sure the USPS would love a do over for 1963.

Disclaimer: There are many options that should be considered before deciding on the best method for clearing the border for your customers. It is best to review with a professional before making any major decision on your supply chain.

Lee Smith is the CEO of LSL Holding Company, a leader in the Supply Chain selection and Courier optimization consulting. Whether you are new to the Canadian Market or looking for ways to improve your existing supply chain to Canada they can help.

        lee@lslholdingco.com

www.lslholdingco.com
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