Canada Post spent $76 million last year on its community mailbox conversion program, which was put on hold last October after the Liberals took office.
In 2013, the post office embarked on an ambitious five-point action plan to cut costs that included raising stamp prices, slashing the work force, and eliminating door-to-door home delivery, by replacing the service with central mailboxes.
It had promised to convert about five million addresses to community mailboxes in the coming years, a move Canada Post said would bring $400 million to $500 million in annual savings.
But in the end, only 830,000 addresses out of a planned 5 million were completed, amid stiff public opposition. On Thursday, Judy Foote, the minister responsible for Canada Post, ordered a formal review of Canada Post’s operations, including the proposal to end to door-to-door delivery, though the Liberals campaigned to stop the conversions.
Given that so few addresses were switched over, the changes result in an annual cost savings of $80 million. Overall, $390 million in savings are attributed to the plan which includes boosting productivity and using franchise retailers instead of corporate post offices.
The cost of the community mailbox program was buried in Canada Post’s annual report which was released Friday. The post office and its affiliated companies including Purolator Courier and a logistics provider reported a $136 million before-tax profit.
For the post office alone, before-tax profit was $63 million, a steep drop from 2014 when it reported $194 million in before-tax profit.
Revenues for Canada Post itself was $6.3 billion, compared with $8 billion when affiliated companies are included.
“It’s really a breaking-even result,” said Canada Post spokesman Jon Hamilton. “It’s a vivid snapshot of the changing way Canadians are using the postal system.
“We are here to serve Canadians, and they are giving us more parcels and less mail. That will continue. We need to adjust to that reality,” he said.
Canada Post delivered 234 million fewer letters in 2015 than a year earlier, a 6 per cent drop, while parcel volumes were up almost 10 per cent, with 16 million more items than the year before. The October federal election was a boon, credited with 25 million extra letters and 60 million direct mail items.
Revenues from letter mail was $3.2 billion, thanks to increasing stamp prices, while parcels only generated a little more than $1.6 billion, and direct mail advertising and other revenue represented $1.4 billion.
Mike Palecek, national president of the Canadian Union of Postal Workers, said the profits were in line with expectations, noting they would have been much higher if the corporation didn’t embark on its plan to end door-to-door delivery.
“We know they have spent tens of millions on the community mailbox program,” he said. “We would have expected them to post a substantially larger profit.”
“Canada Post has been in the business of providing information and merchandise,” which are letters and parcels, said Palecek. “But that landscape is changing. Canada Post has to adapt to meet those challenges. So far they have only been willing to cut the services they provide.”
The union wants Canada Post to consider expanding services such as postal banking or creating a public wireless carrier.
Although Canada Post has previously opposed the idea of postal banking, given most communities are well-served by banks, Hamilton is not ruling it out.
“The review has just been announced. We are open to that process and see where the process lands,” he said. “But the post office has to be self-sustaining.”
~ Toronto Star