International Postal News: Canada Post

A smarter post office might thrive

Any business analyst, looking at Canada Post’s trend lines, would blanch. Mail volumes are dropping. Millions of Canadians have switched to the Internet to correspond, do business, pay their bills and manage their finances. In 2003, the post office delivered 8.1 billion letters. Last year it delivered 6.4 billion.

Costs are rising. Each year, Canada Post delivers to 200,000 new addresses as the nation’s population grows and cities sprawl further into the hinterland. Five years ago, Canada Post made a profit of close to $200 million. Last year, it broke even, but only by slashing costs.

Its plants and equipment are aging. Its 70,000 workers, most represented by the Canadian Union of Postal Workers (CUPW), are fighting to save their jobs. And it faces a massive pension shortfall. Its last chief executive, Moya Greene, resigned seven months ago head Britain’s Royal Mail, which she has a mandate to privatize.

Does Canada Post have a future? Can it survive as a government-owned business?

Deepak Chopra, who took over as chief executive this week, answers both questions with an enthusiastic yes.

The Indian-born accountant and former president of Pitney Bowes for Canada and Latin America, is confident the 144-year-old post office can become an efficient and profitable public enterprise. So is his boss, Rob Merrifield, minister of state for transport, who is responsible for Canada Post.

They face a legion of skeptics. The C.D. Howe Institute thinks mail delivery should be privatized. So does Michael Warren, who served as head of Canada Post from 1981 to 1985. So does the Organization for Economic Cooperation and Development (OECD). Other countries, including Britain, Japan, the Netherlands, Germany and Sweden, have taken that route. Ottawa has ruled out privatization — for now at least.

So what options does Chopra have?

• He can upgrade Canada Post’s technology and redeploy its workforce. Greene left her successor a detailed restructuring plan, Postal Transformation, which the staff is now rolling out.

It calls for mail carriers, whose loads have shrunk, to take on new roles. They would pick up their bags in the morning, with the mail presorted by machine, then head out in Canada Post trucks to deliver both letters and parcels, empty the red letter boxes in their district and pick up mail from local postal outlets.

These moves would increase staff productivity, but not generate new income.

• He can convince the government to sell Purolater, Canada Post’s courier service. Finance Minister Jim Flaherty doesn’t seem to need much convincing. He has already held talks with top executives of FedEx.

This would solve Canada Post’s immediate financial woes — the sale could bring in as much as $1 billion — but deprive the Crown corporation of its only money-making business.

• He can increase the post office’s modest foothold in banking (it now sells money orders).

Canada Post could step into the domestic vacuum created by the chartered banks, which have closed branches in many rural and low-income areas. Internationally, it could provide lower-priced remittances. The banks charge immigrants astronomical fees — up to 35 cents on the dollar — to send money home to their families.

• He can improve Canada Post’s parcel service to make it the best choice for retailers serving online shoppers. Most now rely on couriers to deliver their products.

The union would support at least two of these possibilities. It has advocated for more than a year that Canada Post revitalize its once-ubiquitous postal banks. It also favours beefing up parcel delivery.

Whether any — or all — of these actions would generate enough revenue to turn Canada Post around is an open question. But it at least has a boss who’s willing to try.

Courtesy: thestar.com  (By Carol Goar  on Tue Feb 1,  2011 )