What has surprised you most about the reaction to Canada Post’s five-point plan to get back to profitability?
What’s been completely missed is that what we are really doing is setting the foundation for the next phase of our growth strategy. We can’t build a network, looking forward 20 or 25 years, based on what we did in the last 50 or 100 years. Delivering letters, bills and statements, that’s the fastest declining segment of our business. What’s growing is, of course, parcels.
Remote trade and commerce is like going back to the future. The old mail-order business has come back in the form of e-commerce. With the decision we announced, every step of the five-point plan begins to build the network of the future to carry the products and services of the future. Look, I get the nostalgia – from the little child who writes his first letter to Santa to the teenager who’s ordering online, to parents paying their bills online, to grandparents who absolutely adore the Canada Post brand. We are part of the national fabric of the country, and we will be. We are simply changing the delivery method.
As you withdraw home delivery and raise stamp prices is there a danger of accelerating the decline of your other businesses, including parcels and advertising mail?
It absolutely will help these parts of our business. Canadians are leading busy lives. One-third of Canadians are not home during the daytime. What they want is a convenient pick-up mechanism that saves them time.
Pricing is never an easy decision. But we thought it through very carefully and we tried to manage it as most businesses do. If you are going to buy a single stamp, the cost of just selling alone is over 80 cents, let alone delivery, sorting, etc. So pricing for those who are going to use the mail system the most is not going to be as much as those who occasionally buy a single stamp.
If letters are 40 per cent of your revenue, what do you foresee that being five years from now?
Our goal is to make sure that declines in our letter-mail business are offset by growth in parcels and direct marketing and the e-enabled letter-mail business. So the challenge for us was to reset the network costs.
If you look at the math moving forward, we still expect letter-mail to be 35, 40 per cent of our mix.
Some critics have said you are exaggerating your financial problems to carry out the government’s agenda of job and service cuts?
Look, we have a business to run. And this is a postal system that is going through what every other postal system in the world is going through. We don’t have to look far, just look south of the border – $15-billion (U.S.) losses last year, $5-billion expected this year. This is not about any agenda. It is about what is going on in electronic substitution. The single largest competitor to paper came when tablets were introduced. We now have a competitor that looks, feels and behaves like paper. And we have to be realistic about it. What we are doing is adjusting to fundamental shifts in technology.
When do you expect Canada Post to return to profit?
We have announced a corporate plan that we have submitted to the government that calls for a 2019 return to profitability. But we hope to beat that.
There were a number of other options you could have taken, including variable stamp prices based on distance, eliminating rural mail boxes or moving to three-day-a-week mail. Why did you reject those?
Businesses said there is no good day to stop delivery. When you look at our customer base, they were concerned that we maintained regularity of service for them. The receiver has a very different view than the sender.
If you go for distance-based pricing, it’s going to be very difficult for some Canadians to connect with others, and it may become totally unaffordable.
Is it fair to withdraw home delivery from people in cities when you travel many kilometres to deliver mail to people’s boxes in rural areas?
Over time we have reached a critical mass where two-thirds of Canadians are already receiving mail in a certain method that is very efficient and affordable for us. So it was time to move the other one-third.
What if your plan doesn’t work?
Based on all the homework we’ve done, we feel pretty good about this plan. And we believe we might even be ahead in some aspects, compared to some other postal systems.
So Canada Post’s transformation will be seen as a model for other postal systems?
Australia Post is in the early stages of experimenting with parcel lockers, community mail boxes. Deutsche Post is experimenting with the same concept. We think other countries will absolutely take note of the changes we are making.
What about postal banking, which your unions say you should be getting into?
There is really no room to operate as a bank and create a large carve-out and opportunity. The battle of banking took place in 1967 when the decision was made by Canada Post to exit the banking business, and since then we have no institutional knowledge, no expertise and no infrastructure.
Why is it important for Canada Post to deliver to every Canadian household?
Nobody goes to every address as a matter of routine every day. Yes, our competition can visit them every day when they have something to deliver. We visit every household, and we will continue do the same thing. We will visit every community mail box. The advantage of that is the enablement of commerce.
Any final thoughts?
We want to add value to Canadians who are leading really busy lives. From being your letter box, we want to become your shopping cart.
This interview has been edited and condensed.