A Postal Predicament
As many will recall, in 2014 Canada Post announced it would be ending door to door mail delivery service for the roughly 1/3 of Canadians who still received the service. During the 2015 federal election this became a political topic as the now Liberal Government promised to halt the door to door mail delivery service elimination and instead maintain door to door delivery. More recently the Liberal 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 Liberal Government is considering with respect to how Canada Post operates. While it is unclear at this point what changes might occur some of the reviews findings do indicate the challenges being faced by Canada Post that may be of interest to many citizens in our region.
Overall the ongoing challenge at Canada Post remains declining mail volume, as an example in 2015 Canada Post delivered 8.8 billion pieces of mail; a number that is down almost 3 billion since 2007. At the same time Canada Post is adding roughly 170,00 addresses per year– in other words 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.
Another long term challenge for Canada Post is that while revenues decline and costs continue to increase the employee pension plan is currently 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 continue with the elimination of door to door mail delivery in favour of community mail boxes; this alone 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 in the report 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 Canada Post is not operating in a long term 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.
This will be a topic I will continue to follow 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 at email@example.com or at 1-800-665-8711.
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Dan Albas is the Member of Parliament for the riding of Central Okanagan-Similkameen-Nicola.
Central Okanagan – Similkameen – Nicola