OTTAWA -- A think-tank commissioned by Canada Post is warning that the Crown corporation will be losing $1 billion a year by the end of this decade.

The Conference Board of Canada says the postal service is being hit by a dramatic reduction in volumes in the age of digital communication.

It estimates that the volume of bills, invoices, advertising and publications handled by Canada Post will decline by more than 25 per cent by 2020.

The volume of parcel delivery is expected to buck the trend and grow by 26 per cent due to online shopping, but the Conference Board says it won't be enough to offset the revenue lost in other areas.

The report says price increases won't be enough to make Canada Post self-sustaining.

It estimates $576 million a year could be saved by the elimination of door-to-door delivery for urban homes that get it -- about one-third of Canada's households.

The report comes as Canada Post approaches the two-year anniversary of rotating strikes and a lockout of 48,000 unionized workers in June 2011.

The two sides were ordered back to work by the federal government and the dispute was sent to arbitration, but it took until late 2012 to work out a contract, which is in effect until 2016.

Canada Post issued a statement as the Conference Board analysis was released, saying the report is "the beginning of an important conversation" about what the public values.

"Canada Post must seriously consider all the options put forward by the Conference Board with the understanding that no single initiative will be sufficient to stem the losses from the steep decline in mail volumes," the corporation said.

Last week, it announced it expects to lose money this year following a $127-million profit before taxes in 2012.

The $253-million loss before taxes posted in 2011, which included the work stoppages, was the first time Canada Post had reported a loss in 16 years.