“Canada Post is losing money at the moment. She will lose even more money next year and even more the year after that. And what they don’t understand is that they are on the verge of bankruptcy,” argued Ian Lee, associate professor at the Sprott School of Business at Carleton University, during a video interview with CTVNews .ca Monday.
This text is a translation of an article from CTV News.
Canada Post has no choice but to transform itself into a parcel post courier service, according to Mr. Lee. The latter agrees with the recently announced proposal by the state-owned company to deliver packages seven days a week.
While rural residents and small businesses rely more on Canada Post, most Canadians live in cities and use electronic means of communication rather than written letters, Lee said. Additionally, a growing number of businesses are moving toward digital, he added.
Canada Post CEO Doug Ettinger suggested at the Crown corporation’s annual general meeting in August that current operations were not viable. In nearly twenty years, Canada Post has gone from 5.5 billion letters per year to around two billion today, explained Mr. Ettinger.
Amid growing financial woes and concerns about the future of Canada Post, an employee strike has disrupted services nationwide since Friday, as negotiations continue between the Crown corporation and the Union of Postal Workers (CUPW) with a view to concluding new collective agreements.
Pivot to parcels
Mr. Lee, who wrote a report in 2015 on the state-owned company, said mail volumes have declined significantly amid the digitalization of the economy.
In the report he wrote for the Macdonald-Laurier Institute, a non-partisan think tank, he argues that to survive, Canada Post should move away from its core business of letter post and become a parcel post service that combines with e-commerce.
SEE ALSO | Strike at Canada Post: the employer wants a special mediator
He made this recommendation to the government and Canada Post, but they rejected it.
“They said: ‘No, everything is fine, everything is fine. We will make do with letter post,'” he said, emphasizing that the digitalization of society has only increased. accelerate since. “So mail continued to decline. Today, Canada Post finally realizes that it is on the verge of death.”
Canada Post had a parcel courier business, but it is not seriously looking to make it more successful, he suggested.
“They wasted 10 years of opportunity, from 2015 to today.”
– Ian Lee, associate professor at the Sprott School of Business at Carleton University,
In his research, Mr. Lee found that e-commerce companies are moving away from doing business with Canada Post to working with gig players, that is, small entrepreneurs.
“The only way for them to survive is to become competitive, which means working weekends and delivering packages,” Mr Lee said. “If they don’t, their income will continue to decline.”
Need for change
Canada Post’s proposals, including wage increases and new delivery model, seem “reasonable” because the crown corporation is losing a lot of money, according to Bruce Winder, a trade expert who tracks trends retail and industry best practices. Mr. Winder also serves as an analyst and advisor to clients in the retail, service and manufacturing industries.
“It’s like a boat going in the wrong direction. How can we turn it around so that it becomes profitable?” he asked in a phone interview with CTVNews.ca on Tuesday. “They need to try something different (and) ask the union to follow them. If they don’t change, they risk no longer existing in three to five years.
SEE ALSO | Strike at Canada Post: “Christmas parties are here,” says an entrepreneur from Chicoutimi
By extending deliveries to seven days a week, Canada Post can be more competitive with courier companies, Mr. Winder added.
The state-owned company can try to reduce costs, increase revenue by increasing services, increase prices in some cases and possibly automate some facilities, he suggested.
But any one of these changes, or a combination of them, could have an unintended effect, such as workers’ schedules changing and small businesses abandoning the company in favor of competitors who might offer lower prices, Mr. Winder argued.
Proposals from Canada Post
During the national strike, Canada Post presented proposals to address its financial difficulties and employee concerns.
Even with losses topping $3 billion since 2018, Canada Post said it is offering deals to protect and improve what’s important to its employees. The company proposed salary increases of 11.5 per cent over four years and additional paid leave while protecting provisions relating to defined benefit pension plans and job security, according to the Canada Post spokesperson , Lisa Liu, in an email sent to CTVNews.ca on Monday.
However, Mr. Lee believes that employees’ demands for better working conditions, better pensions and better wages will worsen Canada Post’s deficit and accelerate the company’s decline.
The state-owned company recognized the need to better position itself for the future by adopting a new delivery model and developing its parcel transportation activities. It offers package delivery seven days a week, more competitive pricing and “other significant improvements.”
“This new delivery model is essential for the future of the company and for us to be able to afford to make offers,” mentioned Ms. Liu in an email sent to CTVNews.ca.
Canada Post declined to provide more information on its proposals.
“We have presented our proposals to CUPW at the table, but we will not be able to go into details out of respect for the negotiation process,” added Ms. Liu.
CUPW did not respond to CTVNews.ca’s requests for comment on the proposals.
Mr. Lee predicts that the next government, whoever wins the next federal election, will impose radical changes at Canada Post.
“I predict there will be very significant staff reductions, very significant layoffs,” Ian Lee concluded. “Canada Post is not viable in its current structure.
Related News :