Special Delivery

The federal government has released its report on the Strategic Review of Canada Post Corporation. With so many of our customers dependent on mail for delivery of their marketing materials, we’ve highlighted some of the report’s key recommendations that may be of interest.

Keeping you posted
Updating infrastructure and improving financial sustainability are among the priorities outlined in the Government of Canada’s recently-publicized report on Canada Post. Following an in-depth review conducted by an independent advisory panel, the 182-page report addresses a number of social, operational and economic challenges faced by the Crown Corporation, from the emergence of electronic communication to the need for billions of dollars in infrastructure funding — all in a market that is seeing shrinking mail volumes, estimated to decline at an annual rate of one percent over the coming five years.

With these considerations in mind, the independent panel has focused on five ‘critical issues’ related to Canada Post’s operations: universal service, modernization, financial sustainability, rural mail, and governance. The resulting recommendations include:

• Canada Post should not be privatized but should consider revising delivery practices.  Universal service is considered the Corporation’s raison d’être and, other than the possible outsourcing of international outbound mail delivery, should remain its overarching business mandate. At the same time, services such as five-day mail delivery across a country the size of Canada — to which 200,000 new mail addresses are added each year — may ultimately need to be replaced by practices such as reserving daily delivery for densely populated areas (an approach taken by mail providers in other countries).
• Canada Post should consider a significant one-time increase in stamp prices. Designed to help the Corporation meet financial targets, this recommendation is based on a couple of proposed pricing scenarios, one of which calls for a two-cent stamp increase in 2009, a five-cent increase in 2010, and one-cent annual increases to follow.
• The price-cap formula for setting lettermail rates should change. The current formula, which bases price increases on two-thirds of the Consumer Price Index (CPI), does not realistically reflect operating costs in areas such as transportation and labour. Instead, the formula should use no less than the full CPI.
• All price increases should be communicated more transparently. Customers should be effectively notified and actively consulted on any price changes through, for example, regular consultation and the advertising of changes in national newspapers.
• Canada Post should pursue commercial activities and potential revenue sources related to its core business, and should be allowed to do so in a timely, competitive manner. The Corporation should continue to operate in more commercially viable areas — courier services, for example — and within these areas, the Board of Directors should have the authority to spend up to $100 million on any single transaction without the need for further approval. 
• Canada Post must modernize its operations. This arguably is the core recommendation underpinning all others. It encompasses many aspects of mail operations, from facilities and service delivery to labour productivity and competitive business processes.

The Report of the Advisory Panel to the Minister is now under consideration by the Federal Government; we will continue to keep you posted on the government’s reaction to, and action on, the panel’s recommendations. The full report can be viewed here.