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Winnipeg Free Press - PRINT EDITION

Canada Post begins work on service overhaul

Posted: 01/31/2014 1:00 AM | Comments: 0

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AFTER dropping the bombshell in December on ending home delivery of mail in five years, Canada Post this week began the heavy lifting of selling the plan.

On Wednesday, Canada Post issued a news release on the guiding principles it will use to convert the remaining five million addresses that have delivery at their door to community mailbox delivery over the next five years.

It will start naming the neighbourhoods that will be affected first in a couple of weeks and start community consultations to figure out what will work best in each community before any changes start to materialize by the end of this year.

On Thursday, Canada Post CEO Deepak Chopra was in Winnipeg for meetings with customers and stakeholders and spoke to the Free Press about the business strategy behind the overhaul.

No one can deny the realities of a shrinking volume of business -- between 2007 and 2012 Canada Post delivered one billion fewer pieces of mail -- and the impact that would have on any corporation with $6 billion in fixed costs.

The Conference Board of Canada has forecasted that without the proposed transformation, Canada Post will be losing $1 billion per year by 2020.

The Boston Consulting Group has projected that by the same year, most of the western economies' postal systems will have transitioned to parcel delivery.

"There is one simple goal behind the business strategy driving our action," Chopra said. "And that is how to revitalize and protect Canada Post and make it relevant for the next generation of Canadians just as it has done for the last several generations."

Canada Post is now on the front end of the curve as far as other G7 countries are concerned, and Chopra says Canada Post is proposing a Canadian solution.

"There is no one-size-fits-all," he said. "When you are 60 million on an island called the United Kingdom, you have density and efficiencies to deliver product. You know our geography. The map of density does not work."

Canada Post hopes its strategy will achieve $900 million per year in savings. It also includes shedding between 6,000 and 8,000 workers but Chopra said that will all come from retirement and attrition.

The business case involves a very aggressive e-commerce strategy, a number of digital offerings and a direct-mail revitalization strategy.

"We think we are creating a very exciting business model for Canada Post to reinvent itself for the digital economy... and doing it without becoming a burden on Canadian taxpayers," he said.

Canada Post can't afford not to embrace the parcel-delivery opportunities e-commerce presents.

It has invested heavily in growing that capacity for three years and revenues are up six-to-seven per cent annually.

"That is higher than our competition in the space," he said. "We have an incredible network in many communities. Even our competition gives us their product for the last mile in northern communities and elsewhere where our competition does not deliver. We have a competitive advantage. We want to make sure we build on it and maximize it."

He said delivery of Christmas parcels in Winnipeg this year was up 18 per cent.

Its e-Post digital bill payment system is an offering Canada Post also makes in the face of plenty of competition, unlike the exclusive right it once had to deliver mail in Canada.

"Our digital offering does not have exclusive privilege," he said. "But it is a product that I believe more small and medium-sized businesses and municipalities will find very interesting. We wanted to make sure we had an offering in the digital space to compete."

Chopra also believes Canada Post can expand its direct-mail business servicing the growing number of loyalty programs and using expanded parcel locker facilities in the new community mailboxes to provide more sample deliveries.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 31, 2014 B4

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