Research suggests ongoing profitability at Canada Post

According to a paper highlighting Canada Post’s financial viability, our country’s public postal service will continue to profit “over the next few years,” during which time researchers suggest expanding money-making services to ensure the Crown corporation’s long-term future.

The paper, which was authored by the research department of the Canadian Union of Postal Workers (CUPW), is titled “Evaluating the Financial Viability of Canada Post Corporation: Dark Glasses or Rose-Coloured Ones.” It was presented at the 25th Postal and Delivery Economics Conference, held May 24-27 in Barcelona, Spain.

“Canada Post and other bodies have a dismal record when it comes to predicting the financial state of our public postal service,” said CUPW National President Mike Palecek. “We decided to look at where these organizations went wrong and develop a better framework for predicting Canada Post’s viability.”

COLOURED GLASSES

During the Canadian government’s recent review of Canada Post, Tom Lukiwski, a Conservative MP for the Saskatchewan riding of Moose Jaw, suggested the possibility of different stakeholders reviewing identical financial information and coming to different conclusions about the corporation’s financial viability.

He noted “someone is either wearing dark glasses or rose-coloured ones”.

The 28-page research paper published by CUPW aims to evaluate Canada Post’s financial viability “through a clear lens, while recognizing that it is difficult to make predictions because post offices operate in a dynamic environment.”

According to researchers, mail volumes have fallen as a result of the shift to digital services such as the Internet; however, e-commerce is growing and has boosted parcel volumes.

What’s more, post offices around the world are diversifying: non-mail revenues now account for an increasing share of industry revenues, but mail is still the main source of revenue for many posts, researchers claim. They also note all industries are “dealing with historically low interest rates and other challenges as a result of the 2008 financial crisis.”

NO ONE CAN PREDICT THE FUTURE

“What we learned is that no one can predict what is going to happen a decade from now so it is best to limit the timeframe under consideration. It is also advisable to exclude the impact of one-time events and be up front about assumptions regarding future costs and revenues,” said Palecek.

The paper makes a projection of modest profits from 2016-18 and suggests there’s “no financial crisis at Canada Post and no need to make cuts.”

“Our analysis shows that Canada Post is in pretty good shape but that it needs to add new services such as broadband, postal banking and at-the-door assistance for seniors in order to reduce its reliance on a limited number of product lines,” added Palecek. “This is what many post offices around the world have been successfully doing for years.”

Section one of the paper outlines the uncertainties facing the corporation from a cost and revenue perspective. It also looks at factors such as productivity increases, work rules and discount rate changes. Section two reviews ongoing discussions within Canada about the future and viability of its public postal service. Section three considers recent reports or plans that have made wildly inaccurate predictions about the financial situation of Canada Post. The fourth and final section provides a framework for accurately predicting the corporation’s viability.

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