Community mailbox suspension limits delivery of savings
Just 17 per cent of planned conversions took place before Canada Post halted the program in October
Canada Post has converted only 860,000 addresses out of a planned 5 million to community mailboxes, which will bring annual savings of only $80 million.
The information is contained in the Crown corporation’s third-quarter financial statements related Friday. The post office suspended the conversions in late October, a week after the Liberals, who had campaigned to stop the conversions, won a majority government.
Another 460,000 addresses that were to be switched over in November, December and next year are now on hold. Just 17 per cent of the planned conversions have taken place.
It is unclear what Public Services Minister Judy Foote will do regarding addresses that have already been converted to community-mailbox delivery.
But Canada Post spokesman Jon Hamilton noted that the Crown corporation will “support a review in any way we can.”
The review is referenced in a mandate letter from Prime Minister Justin Trudeau to Foote, asking her to “undertake a review of Canada Post to make sure it provides the highquality service that Canadians expect at a reasonable price.”
In 2013, facing a steep drop in mail volumes, Canada Post launched a five-point action plan to cut costs. The plan included shifting about five million addresses from door-to-door home delivery to community mailboxes over five years.
It said when completed, the switch would bring $400 million to $500 million in annual savings.
Canada Post is not saying what costs have been incurred to convert to community mailboxes, or what it cost to halt the program.
Hamilton would only say that much of the savings is from reduced staffing through attrition.
The Canada Post segment of the Crown corporation lost $13 million in the third quarter, but the losses would have been greater, if not for a jump in parcel deliveries and mailings related to the federal election.
Hamilton estimates that there were an additional 25 million pieces of mail related to the Oct. 19 election, so the drop in letter volumes was only 2.6 per cent, compared with the typical rate of 5.5 per cent.
Even though parcel volumes are usually slow in the third quarter, Canada Post says the number of parcels were up by four million this year, or 16.1 per cent.
“For us, it was a milestone,” he said. “It meant a boost, largely in August, as the back-to-school rush and all the shopping that comes with back to school.
“We are seeing a lot of it shifting to online shopping.”
Still, the post office recorded a $13 million before-tax loss in the quarter, compared with $13 million in before-tax profit a year earlier.
Pressures include pension payments and employee benefits — though the corporation received permission from Ottawa to delay making special back payments until 2017. Otherwise, it would have to make $1.4 billion in payments this year, not counting regular contributions.
But the Canada Post group of companies — which includes the post office as well as Purolator courier and a logistics firm — turned in a before-tax profit of $10 million, compared to a $35 million profit in the same period a year earlier.
The Canadian Union of Postal Workers says the Crown corporation will probably see a much bigger profit this year
The Canadian Union of Postal Workers argues the third quarter, which includes summer, is always a slow time of year.
“There is every reason to expect that the Canada Post Group of Companies and the Canada Post segment will both see a much greater overall profit this year once the busy holiday season is factored into its last quarter,” said national president Mike Palecek in a news release.
The union, which is scheduled to begin bargaining on a new contract, noted that in the first three quarters of the year, all the Canada Post companies earned $28 million before tax.
Other changes Canada Post introduced to increase revenues included hiking domestic stamp prices in March 2014 to 85 cents each, if sold in a booklet, or $1 for a single stamp.
Domestic stamps will rise to 90 cents on Jan.11, if bought in a booklet, but individual stamps will stay at $1. Stamps to the United States will increase to $1.25 from $1.20, and international stamps will go from $2.50 to $2.60.