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June 28, 2011

Is Canada Post becoming obsolete?

CANADA - So long as people keep using Canada Post, no, they won't be obsolete.

But by 2030 they could be close to being shut down due to a shortage of people using Canada Post.

The reasoning is as follows...

#1. Canada Post workers are overpaid in comparison to other delivery services (everything from Fedex/UPS style couriers to bicycle couriers). Price wise it just doesn't make sense to send any large packages via Canada Post when other couriers are cheaper.

#2. As the internet continues to surge in popularity most Canadians are choosing not to use traditional snail mail any more. Some day in the future the idea of having a conventional "mail box" will be seen as antiquated. Some people already believe it is.

Snail mail has been in a decline in Canada, falling to 5.08 billion in 2009 from 5.45 billion in 2005. Canada Post says volumes have declined 17% over the last five years.

#3. Canada Post isn't learning to adapt in this changing world. While the postal service in other countries are adapting, Canada Post is still stuck in the postal dark ages.

#4. What happens when a courier service offers to start handling letters too? But does it at a rate cheaper than Canada Post AND offers speedier delivery to a local depot where people can pick up their letter (hand delivery to homes is a ridiculous waste of money/time)? Well then the final nail in the coffin will be complete.

In Canada the mail is moving again after a long labour dispute at Canada Post. The strike has raised many questions about how Canada Post operates. Rural and remote communities are dependent on Canada Post for everything from medicine to food... but those things could be delivered via a courier service instead.

And a courier service wouldn't be delivering bills or junk mail. All that nonsense could be done online, sending notices to your bank account / email account and spam (which thankfully most people now filter out).

Small and medium-sized businesses use the postal service for invoices, payments and shipping, etc. found alternatives after the Canada Post lockout and have switched to scanning invoices / electronic payments / couriers. Assuming the new way is cheaper or more efficient, why would you switch back to something which is obsolete?

Dan Kelly of the Canadian Federation of Independent Business says while many companies will need Canada Post for deliveries, since it is mandate is to deliver to every address in the country, companies which have switched to electronic invoicing will probably stick with it because they've discovered how easy and cheap it is.

“The bad news for the union and Canada Post is they have hastened a negative trend for themselves,” says Kelly.

“We are extremely worried that people have found alternatives,” says Canada Post spokeswoman Anick Losier. “The digital age is here and we need to make changes instead of relying on a product in decline.”

Canada Post currently offers police background checks (to prevent mail scams) and PIN management for American Express. But that is just the tip of the iceberg compared to what other countries are doing to make the postal service better.

The Canadian Union of Postal Workers says Canada Post should offer other services such as banking, especially in remote parts of Canada. The Canada Post Bank? Doesn't sound too bad. More likely they would just make a contract deal with one of Canada's big banks.

“While Canada has simply talked about postal banking, most of the rest of the world has been doing it,” says a 2010 union report submitted to Canada Post. “Each year, 1.5 billion people use the services of postal banks and more than 400 million have postal bank accounts.”

Canada Post could also offer internet service or even "email to mailbox" service, a faster way to deliver the mail by sending an email across the country to another post office where it is printed out and hand delivered. Saves on travel costs and delivery time.

Some people even suggest Canada Post should be sold and privatized.

“If you look at what’s happened to Canada Post, it’s a miracle that it’s still around today,” says Harvey Schwartz, an emeritus professor of economics at York University.. “It’s barely profitable.”

Canada Post hasn’t been subsidized by the taxpayer in 15 years and has maintained a profit during that time by raising postage stamp prices and package rates whenever costs go up. In the 2009 annual report Canada Post's profit was $319 million before taxes. Adjusting for unplanned pension and benefit costs, pre-tax profit would have been $48 million.

No wonder Canada Post workers were striking. They do all the work while the government corporation reaps the profits. $48 million isn't a lot, but spread it among their staff and it will make them happier.

In contrast the United States Postal Service last week announced it is suspending pension contributions to its employees’ pension fund. The U. S. post office was $8 billion U.S. in the red last year and is continuing to lose money. They will be asking for a government bailout in September or raising the cost of postage stamps / package rates.

In Germany, Deutsche Bundespost was privatized and it eventually became Deutsche Post DHL, delivering letter and parcels across Germany. It has about 470,000 employees worldwide and generated revenues of 51 billion euros in 2010.

So is Canada Post obsolete? When in doubt, check Google.

Search Canada Post obsolete.

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