Trudeau about to face his own mail delivery problem

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Ending door-to-door mail delivery likely ranks as the most unpopular move the post office has ever made.

Canada Post president Deepak Chopra botched the communications strategy when he awkwardly defended the cost-cutting move by suggesting it might encourage house-bound seniors to get more exercise.

"The seniors are telling me, 'I want to be healthy. I want to be active in my life,' " Mr. Chopra told a parliamentary committee in December, 2013.

Canadians were not amused at the thought of grandma, clad in a track suit, slip-sliding down icy sidewalks to collect her pension cheque.

Justin Trudeau promised a moratorium on shifting Canadians to community mail boxes during the election.

And on Monday, Crown-owned Canada Post pre-emptively suspended all further "conversions," including 460,000 already in the works as it awaits guidance from the new government.

But reversing an unpopular decision does not mean it's the right thing to do.

Prime-minister-designate Justin Trudeau will almost certainly reach the same conclusion as the Conservatives did about the post office – something major has to give.

Canada Post can't continue to fund all of its operations subsidy-free without dramatically changing the way it operates. Delivering letters to Canadians isn't just a legislative requirement, it's the post office's main business, accounting for slightly more than half its revenue.

But it's a business that is in inexorable decline. The Internet is rapidly making most mail obsolete. So-called "transaction mail" – letters, bills and statements – fell by 102 million pieces in the first half of this year compared to the same period in 2014, a 7.2-per-cent decline. And the rate of decline is accelerating.

The challenge is compounded by the fact that every year Canada Post must deliver less mail to more people. Mail volumes are dropping by more than 200 million pieces a year – down a total of 1.4 billion since 2006. And yet the number of addresses grows by roughly 170,000 a year, compounding inefficiency.

Canada Post delivered 3.6 billion letters in 2014. Assuming a steady rate of decline, its mail bags will be empty in less than two decades as the letter goes the way of the typewriter and the fax machine.

The rest of Canada Post's business is made up of parcels and direct mail, both of which are growing, but not nearly fast enough compared to the decline of letters. Add to that a large solvency deficit in its pension plan and a shrinking work force, and the arithmetic is not favourable.

The plan to shift 5.1 million Canadian homes to neighbourhood boxes was the centrepiece of a five-year plan to put Canada Post back on firmer financial footing. The post office estimates the change would have saved $400-million to $500-million a year.

The conversion has barely begun. Roughly 100,000 homes were moved to community boxes last year and another 800,000 this year. That means Canada Post has so far converted just 900,000 – well shy of its target of 5.1 million by 2018.

Canada Post's labour unions insist that the post office is profitable and can afford to reverse the service cuts.

That's a distortion of the facts. Yes, Canada Post posted a profit of roughly $200-million last year on revenue of $8-billion. But it's a thin profit margin, buoyed by one-time gains from a stamp price hike and lower employee benefit costs.

Through two quarters of this year, Canada Post has slipped back into the red, and it's projecting a loss on the year.

Canada Post needs the half a billion dollars in savings to avert large and inevitable losses down the road.

If Mr. Trudeau wants to forgo those savings and permanently halt the conversions, he has some explaining to do.

Why would some Canadians deserve better service than others? Getting mail at your door is already a rare privilege in Canada. Only about a third of the 15.3 million addresses in Canada now get it. Most of the rest of us pick it up our mail at community boxes or in apartment or office building mail rooms. A relatively small number of rural residents still get mail delivered to mail boxes along highways.

Mr. Trudeau will also have to explain to Canadians why they should subsidize home delivery for a privileged minority, including people living in some of the toniest urban enclaves in the country?

Unless the Liberals can come up with a more palatable way to save $500-million a year, taxpayers will soon have to swallow some pretty hefty losses at Canada Post.