Canada Post’s decline will be stemmed by transformation

I have to admit that I found Canada Post’s annual report a bit surprising. I did not expect to see a profit at all, so the news of black ink caught me off guard. Then I read a bit closer and saw that the profit was really the result of eliminating some massive obligations related to staffing costs. Take that away and it’s more bad news. The news is made worse by the realization that mail volumes are dropping, and are not expected to recover. It seems hard to believe that a company can handle billions of pieces of mail in a year and still lose money, but that is the reality of Canada Post. During my first year as editor of Canadian Stamp News I was shocked at how tiny the profits of Canada Post were compared with the size of the company and volume of business it handled.

Sure, the corporation was piling up profits in the millions, but it had expenses in the billions. Canada Post is one of the largest businesses in Canada, and much of its costs are related to labour, and the cost of fulfilling its requirement to provide universal postal service to Canadians. Just a few years ago, when I was reviewing the annual report for the year 2010, I noticed that Canada Post, while making money then, was one bad week away from being in the red. Along came the labour problems of 2011, and that’s what happened. Lower volumes of mail, combined with an increase in the number of addresses to be served, means that it becomes increasingly less efficient to deliver mail. At one time, that loss was covered by huge profits from ad mail. The truth is that we get fewer and fewer pieces of ad mail as well.

On the other hand, I now get several ad emails every day. A quick scan at my personal email inbox finds items encouraging me to purchase software, bread, bacon, donate to JAZZFM, or even to purchase a $300,000 “VIP” condo in an as-yet unbuilt Toronto building. At the same time, I haven’t seen an old-fashioned chain letter since the 1960s, when people got smart enough to ignore them. But I see at least three or four appear every week on my Facebook page. Thinking about it now, an aggressive strategy of creating and initiating really convincing chain letters could help slow the decline in letter-mail. But back to reality: the bad news is that Canada Post is a huge company, with a growing number of customers and a declining volume of business.

The good news is that Canada Post has the most extensive delivery system in Canada, a subsidiary that is in the courier business, and a proven ability to reinvent itself. Remember the 1970s? I’m not talking about polyester clothes and muscle cars, but the Canada Post of that decade. The corporation seemed to have a strike every single year, often lasting for weeks. Labour relations were poor, to the point that violence was witnessed on picket lines. The service was awash in a sea of red ink, and most Canadians considered it a joke at best, and a national embarrassment at worst. Many people at Canada Post were embarrassed to admit they worked there.

Back then, the corporation turned itself around and started making money. Service improved, and working for the post office was once again an honourable job. It meant some fundamental changes in how the post office worked, but that was what had to happen. Another transformation seems to be happening now. Mail may be around for a long time, and the postal service may be around for a long time, but neither one of them is going to remain the same.

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