Canada Post’s delicate makeover

Ask anyone who knows me well, I enjoy sending hand-written letters and cards. To get a personal letter in the mail is even better.

But I haven't written or received one in a long time, which is why a report this week about how falling mail volumes will result in Canada Post notching a $1-billion a year loss for 2020 was a wake-up call. It made me feel like a bad friend, a bad relative.

The Conference Board report, which was commissioned by Canada Post, noted almost half of all Canadian households sent a maximum of two pieces of mail per month. Indeed, in 2012 the amount of letter mail sank by one billion compared to 2006.

Further, the report titled The Future of Postal Service in Canada foresees the federal Crown corporation's postal system's total volume of mail will drop by slightly more than 25 per cent per cent by 2020.

“Canadians recognize that the way they use mail is changing, but haven't yet fully understood how severely that is affecting Canada Post's business model," said David Stewart-Patterson, vice-president of public policy.

“E-commerce is boosting demand for parcel delivery, but households are sending fewer letters, businesses are encouraging electronic bills, governments are moving to direct deposit, and advertising is moving to the Internet. Canadians must consider what kind of postal service they really need in the years ahead.”

Canada Post fell into the red in 2011 after 16 years of profitability. To thwart that gloomy forecast, the Conference Board suggested some key ways of cost-cutting including: wage restraint; alternate-day delivery for mail, but not parcels; converting door-to-door delivery to community mail boxes; continued replacement of corporate post offices with franchised postal outlets; and reduced speed of delivery.

In a statement responding to the report, Canada Post said it welcomed the report as the starting point of an important conversation with people across the country about what they value and what needs to change. On Wednesday, it launched a public forum seeking feedback on what kind of postal service Canadians want.

More than just business

Clearly this is a business story, but it's also a people story. "Canada Post is an important fabric of Canadian society and Canadian culture," says Walid Hejazi, an associate professor at the Rotman School of Management, who advises business leaders in the school's executive programs. "It's fundamental. In and of itself it connects every single household."

"The status quo is absolutely not sustainable, period. Something has to change," he adds of Canada Post's current business model.

In outlining its key cost-cutting measures, the report said eliminating delivery to the door for urban residential customers would be the option with the largest financial impact, saving a projected $576 million a year.

Olivia Chow, the Official Opposition critic for transport, infrastructure and communities in Ottawa, told the Globe and Mail service cutbacks is not the way to go.

“They should aggressively expand Internet service and generate enough revenue that can provide the support for traditional services,” she said in an interview.

“Canada Post is supposed to serve the community, and that includes Canadians who can’t afford Internet and seniors who are dependent on traditional mail.”

Denis Lemelin, the president of the Canadian Union of Postal Workers, echoed those concerns.

“If we cut the wages, and door to door delivery, cut the same day delivery and all of that, I think it’s wrong … If you cut, cut, cut, Canada Post will not be any more relevant to the public. And what will happen after that?” he told the Financial Post.

I don't envy the balancing act Canada Post faces in protecting its bottom line.

I can't remember the last time I sipped a cup of tea, sat on my couch and wrote a letter to someone. In a related snap poll of a small group of friends my age, one dad I know said, "Two letters are handwritten a year. They begin with Dear Santa..." Others said they rarely write or receive traditional letters nowadays. Some said they miss it. I miss it.