What future for Canada Post?

When was the last time you went to the post office? How many times a week do you check the contents of your mailbox? Do you still buy stamps?

Do the exercise, ask around. The responses probably reflect a very thin relationship with an institution that is more than 270 years old. Far from its heyday.

Since its birth in 1754, the post office has woven a web over a vast country. For decades, postal workers passed through each address twice a day (until 1951) and even on Saturdays (until 1969).

But in a short time, the Internet changed everything. In 2006, around 5.5 billion (yes, billion) letters were sent. In 2023, it was less than half. And of course, revenues have declined.

But the number of addresses to visit has continued to increase. Result, recalls Alexandre Brisson, vice-president of Engineering at Canada Post, mail delivery costs continue to rise.

Last year, Canada Post lost $748 million. This is 200 million more than the losses recorded in 2022.

The postal service says it is at a pivotal moment in its history and writes in its annual report (New window) need greater flexibility to adjust to an environment hypercompetitive.

This data will fuel discussions at the tables where Canada Post negotiates the working conditions of its 68,000 employees.

A universal problem

It is of course not only in Canada that the postal world is being shaken up. Email and smartphones have eliminated the need to send letters and invoices all over the world.

Some postal services have been privatized (United Kingdom, Australia), others have cut the frequency of home delivery in half (Sweden, Belgium). Everyone is looking to find profitability and a sense of purpose.

In France, postal workers already look after elderly people living alone at home in small towns. Meal delivery to less independent people is even seen as a growth sector.

In the United States, USPS is trying to become the preferred player for home package delivery. A lot of effort is put into capturing the largest possible market segment.

Increasing the volume of packages, not just from Amazon, but also from FedEx and UPS, is the key to the financial future of the Postal Serviceexplained recently the Postmaster General of the United States, Louis DeJoy.

For its part, Canada Post has been putting solutions in place since at least 2013. The Company has invested significantly to facilitate parcel delivery and modernize its equipment and ways of doing things.

The pandemic has shaken up the institution. Lockdowns have boosted demand for parcel delivery; more flexible and cheaper delivery people have appeared on the market.

Amazon, which was a major customer of Canada Post, has become a competitor. Its trucks travel in many cities across the country, which adds to the difficulties.

Many postal workers seem disoriented by these upheavals. The roads are longer, the bags weighed down by the numerous circulars. The job would be more difficult, less attractive.

For many people, we are no longer of much use, summarizes a former postal worker who prefers to remain anonymous. Disappointed, he requested a transfer to an interior job. Others have changed profession altogether.

Does Canada Post have the right plan?

A spokesperson for the Canada Post Corporation refused politely our interview request, referring to recent financial statements.

The transformation plan, entitled Carrier of a stronger Canada, discusses the needs to increase capacity and improve shipment tracking. But it contains few concrete details.

The Company needs a radical restructuringaccording to the formula favored by Ian Lee, one of the rare observers of the Canadian postal world.

Teacher at the Sprott School of Business from Carleton University, he denounces the fact that postal workers still walk every street in the country, every weekday.

We no longer need all these post offices and daily delivery of letters. We have to rethink everythinghe says from his office in Ottawa. We must reinvent the post office to save it.

He believes that Canada Post should focus on its main strength: a vast network to reach every address in the country. But not necessarily every day.

He sees a future in the market for delivering parcels and official documents. These are not urgent things to be delivered, which means that the delivery time can be adjusted to optimize the movements of postal workers.

This dynamic delivery method, with a route that changes according to needs, could reduce labor costs, which represent approximately half of Canada Post’s annual expenses.

The key, according to Ian Lee, is to remove the legal obligation to deliver mail within a certain time frame (2, 3, 5 days depending on the destination); an obligation that would no longer have its place in an era of electronic communications.

People don’t use the post office for its speed… If you’re in a hurry, you email or call FedEx! It’s up to Canada Post to adapt.

Which path to choose?

Canada Post is of course not the only one experiencing these disruptions. Which means that there is no shortage of examples to draw inspiration from. It remains to choose.

Recent hearings before a Senate committee provide an example of how existing tensions, particularly between policymakers and employees, complicate the work of policymakers.

Before the Senate, the vice-president of operations and engineering at Canada Post spoke about drone delivery tests carried out in hard-to-reach regions of the United Kingdom.

We are doing tests on this. We follow what is happening in the market, revealed Alexandre Brisson in April. He also explained that Canada Post was far from ready for drone delivery.

Despite everything, the option already seems to have been rejected by the largest union of Canadian postal workers. Drones do not pay taxes in their communityreplied Jan Simpson, president of CUPW, speaking of the need to preserve good jobs.

To survive, the Canada Post Corporation must find new sources of revenue while reducing its expenses. This balancing act is complicated by the obligation to renegotiate the provisions of collective agreements.

There is an urgent need for reform, recalls Ian Lee, of Carleton University, stressing that competitors in parcel delivery will not do Canada Post any favors.

The post office people, they are neither fast enough, nor flexible enough, nor competitive enoughhe says. And if they don’t succeed [à se restructurer]the future is really dark.