Deliver Canada Post from its outdated model

New CEO should have free rein to modernize, writes Ian Madsen.

One new CEO opening will top most stress-filled leadership positions: Canada’s chief mail delivery officer.

There are many iconic symbols of Canada but — if it ever was one — Canada Post certainly has long ceded that status.

The Crown corporation predates Confederation but hasn’t endeared itself to anybody for generations.

The unfunded liabilities in Canada Post’s pensions and benefits are reminders of its past desperate efforts to mollify its workforce.

A resolution, and likely bailout, of those liabilities could be crucial to making Canada Post truly viable and self-sustaining, whether Ottawa has the courage to divest itself of this very old and possibly obsolete organization.

A study by the Frontier Centre for Public Policy earlier this year estimated that Canada Post could be worth as much as $10 billion to $11 billion (fully taxed); much more if it were made more efficient and rationalized.

A second scenario, without unfunded liabilities, improved the theoretical value but not enough to offset the cost.

However, this is purely a mathematical issue. In the real investment world, a lowdebt, unfettered Canada Post would be worth far more than it is currently.

That’s the crux of what needs to be considered when hiring a new chief executive to guide Canada Post: allowing full scope for the company to operate, with as few constraints as possible to maximize profitability and free cash flow, and to offer affordable and responsive services to customers, whether households or businesses.

This freedom to pursue business as it sees fit has long dogged Canada Post.

While it has a monopoly on using community mailboxes and on home letter delivery, it must also deliver mail to anyone, anywhere in Canada, no matter how remote, costly or impractical as it may be.

Politicians are very sensitive to any complaints related to curtailing or modifying mail service, as exemplified by the rollback of expanded community mailbox deployment and proposals to reduce the frequency of mail delivery.

Yet nobody seems to critically examine these complaints, or the reality of how mail service is received or conducted today.

Few people get mail delivered to them everyday. Most of the items delivered are direct mail advertising or other promotions.

Utility, insurance, bank, government and other important notifications, invoices, offers and similar things are all available online or through emails, as are periodicals.

Parcels are commonly sent via courier services, sometimes with no charge, depending on the items and suppliers.

People living in remote communities already get food and other deliveries by airplane or other conveyance; letters, cards, other communications can be loaded with them.

Where Internet service is not available, there is usually smartphone service by satellite. Even though this isn’t cheap, it certainly can be deployed.

Bill payments can be arranged with banks and other institutions to be automatically deducted. Government and other cheques can be directly deposited.

And call centres for nearly every organization handle issues much more responsively than by mail.

There are many reasons to allow a new Canada Post CEO much more latitude to run the company in a way that serves the needs of today’s customers. To maximize the value, viability and utility of Canada Post, she or he should be permitted as free rein as possible.

This could mean that Ottawa must take on most or all of the unfunded liability. But that could be a small price to pay to ensure that Canada Post and its employees survive and prosper.

And it’s a small price to pay to ensure that the rest of us might get some money back, when, like the ancient Royal Mail in the United Kingdom, and the Dutch and German postal services, it’s finally sold to investors who can — and should — take on the risk of operating it in a rapidly changing economy.