Shortly after Canada Post’s top executives warned of “unsustainable” finances and the need for “significant changes” to survive, the federal government has had little to say about what solutions are needed.
Chairman André Hudon told the Crown corporation’s annual general meeting on Wednesday that the national postal carrier is at a “critical juncture” as it struggles to compete against e-commerce platforms such as Amazon and faces falling demand.
The company also noted that the ministry that oversees Canada Post has not approved a corporate plan since 2020 and has yet to sign off on a submitted plan that would take the organization through to 2028.
But concerns about what a revamped Canada Post Service might look like tend to focus on the hundreds of millions it would cost taxpayers to plug its fiscal gaps in the form of increased government funding, or on the service cuts that might be needed to ease budget pressure and how to ensure all Canadians can continue to receive mail.
Asked about those concerns Thursday, a spokesperson for Public Services and Procurement Minister Jean-Yves Duclos’ office told Global News that the government “will continue to work closely with Canada Post to secure its long-term future.”
“As announced in Budget 2024, the government is also considering how to leverage Canada Post’s portfolio of federal properties to build more housing for Canadians,” his office said in a statement. “We will ensure that the postal service remains part of Canada Post’s mandate as a service-first organization focused on mail delivery.”
The statement offered no details on how that will be achieved, and opposition politicians and analysts alike warn that time is running out.
Global News has reached out to the Conservatives and NDP for their views on what should be done to adapt the postal service. The Conservatives did not respond to a request for comment on Thursday.
“What we need is a viable plan for the future,” NDP public services critic Taylor Bachrach said in an interview. “And that’s up to the minister. It’s up to the government to provide some guidance so that we can have a public postal service in the future.”
Bachrach, who represents the Skeena—Bulkley Valley electoral district in northern British Columbia, said his main concern is the loss of mail delivery service in rural communities like the one he serves.
“They receive medications through the mail in small, remote communities that have few retail shopping opportunities,” he said. “They do a lot of shopping and buying products through the mail.
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“If we didn’t have Canada Post, you can bet that Amazon wouldn’t be able to serve those communities in the same way and at an affordable price.”
The company has been posting “significant” annual losses since 2018. Last year’s loss was the second-largest on record, at $748 million.
In May, Canada Post raised the price of a stamp purchased in a booklet by seven cents, to 99 cents. The price increase is expected to add $23.8 million to its gross revenue by April 2025, it said at the time.
Canada Post has asked the federal government to update legislation setting mail delivery times to make them more flexible, raising concerns that it could reduce daily mail deliveries.
In May, President and CEO Doug Ettinger testified before the House government operations committee that the company needs to expand its operations and ensure seven-day-a-week deliveries to compete with Amazon and other private package delivery companies that have taken slices of Canada Post’s business.
Ettinger said at Wednesday’s general meeting that the company has seen its share of the package delivery market cut in half since 2019. Mail deliveries, once Canada Post’s main source of revenue, have plummeted from 5.5 billion letters a year to about two billion over the past two decades, he said.
Bachrach said he supports initiatives suggested by the Canadian Union of Postal Workers on ways Canada Post can innovate and generate additional revenue.
These include expanding services at post offices to include postal banking and passport renewals, and developing its own e-commerce platform for small and medium-sized businesses that could compete with Amazon.
However, these and other measures would require government support.
“It is clear that innovation is needed,” Bachrach said. “Businesses need to adapt to this new reality and we need the government to show some leadership to achieve this.”
Marvin Ryder, an associate professor of marketing at McMaster University, said European countries have shown that the government service model can be effective.
He told Global News that any revenue-generating solution is preferable to alternatives such as increased government funding, which could entail higher taxes.
“I don’t think people would like the idea of taxing the postal service to keep it running,” he said. “It could be used as a short-term measure, but it’s not a permanent solution.”
Other public postal services around the world have been grappling with the same e-commerce hurdles and declining demand as Canada Post.
In 2020, the U.S. Postal Service made drastic cuts that it later had to reverse to ensure mail-in ballots could be processed on time during that year’s election, when mail-in voting was in high demand due to the pandemic.
In 2022, a law was passed that forgave billions of dollars of debt and eliminated requirements for the agency to pre-fund workers’ health care benefits. That provision had been blamed for pushing the service into 14 consecutive years of losses, and it is estimated to lose another $160 billion over the next decade.
Ryder said he had hoped to hear ideas on how Canada Post could change course from the same executives who warned of a financial cliff on Wednesday, but was disappointed that none were offered.
However, he said he expected the future of the national post office to be a major issue of concern for the rest of the year, particularly once Parliament returns in September.
“We can’t keep losing this money forever,” Ryder said. “By my calculations, Canada Post will start running out of cash in June 2025.
“I think there should be some big news from Canada Post in the next six months, because something has to happen and it has to happen quickly.”
— with files from The Canadian Press
© 2024 Global News, a division of Corus Entertainment Inc.
