Postal pandemonium

In 2014, Canada Post announced it would end door-to-door mail delivery service for one-third of Canadians who still received the service.

This became a political topic during the 2015 federal election as the now Liberal government promised to maintain door-to-door delivery.

More recently, the government has released an independent review of Canada Post that will be used for further scrutiny by the House of Commons Standing Committee on Government Operations and Estimates.

This committee will ultimately make recommendations that point to potential changes that the government is considering with respect to how Canada Post operates.

While it is unclear what changes might occur some of the review’s findings indicate the challenges being faced by Canada Post that may be of interest to many citizens in our region.

The ongoing challenge at Canada Post remains declining mail volume. In 2015, Canada Post delivered 8.8 billion pieces of mail, down almost $3 billion since 2007.

At the same time, Canada Post is adding roughly 170,00 addresses a year.

There are more addresses being created Canada wide and at the same time there is less mail.

This results in increased delivery costs with steadily declining revenues.

While revenues decline and costs increase, the employee pension plan is underfunded by just over $8 billion.

This means that more revenues must at some point be directed to fill the pension solvency gap that exists to eliminate this liability.

What are some of the possible solutions?

• The report suggests that the single largest potential for cost savings is to eliminate door-to-door mail delivery in favour of community mailboxes. This would yield savings in excess of $400 million.
• Further conversion of Canada Post run postal outlets to franchise operations is estimated to save $177 million while further streamlining of processing operations would provide savings of $66 million.
• The report also looked at ways to increase revenue that included selling advertising, estimated to raise close to $20 million.
• Another potential revenue source raised is the potential revenue from distributing marijuana if and or when it becomes legalized. 
• Postal banking was thoroughly examined although it was not recommended as an option.

Ultimately, the report concludes that Canada Post costs are increasing at a rate faster than revenues and as a result it is not operating in a sustainable manner.

The report concludes that significant changes and a new business model will need to be developed in order to allow Canada Post to be better positioned for new and emerging trends in the marketplace. 

 I will follow this issue once it reaches the committee review, and welcome your comments, questions and concerns on Canada Post or any matter before the House of Commons.

I can be reached via email or at 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.