Canada Post preparing for half as much mail, CEO says

Canada Post is preparing for a 50 per cent drop in the volume of mail and will have to reinvent itself over the next five years, says CEO Deepak Chopra.

The Crown corporation, which is weathering a blast of criticism from the public for its decision to end home delivery and raise postal rates, faces major challenges in a tight financial environment, Chopra said in an interview on CBC News Networks The Lang & OLeary Exchange.

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It would be wrong to believe that mail will disappear entirely, Chopra said, as items such as passports, health cards and birth certificates, which have no virtual equivalent, will still need to be sent via mail.

But much of the rest of Canada Posts business will move to email, including most billing, he said. Canada Post is already trying to grab a piece of e-billing now, through its ePostonline billing service.

We have to get ahead and build a network that can handle a 50 per cent reduction which is about $1 billion to $1.5 billion drop in our revenues, Chopra said.

Challenges ahead

At the same time, the post office is facing a deficit of $6.5billion in its pension plan, and expects to shed 6,000 to 8,000 people from its workforce, a restructuring that will cost money.

It has set a goal of being profitable, or at least not needing a subsidy from taxpayers, by 2018-19.

But Chopra said Canada Post already gets 40 per cent of its revenue from parcel business and direct marketing, both of which are growth areas.

We have to move the conversation to that new brand, he said, pointing out that Canada Post has not done a good job of positioning itself as company with a future, because it was too busy fixing the basics.

E-commerce is critical to Canada Posts plan, as is moving postal services online everything from buying stamps to tracking parcels and redirecting your mail.

More expensive stamps

At this stage we have made a structural change the pricing is along with usage. If you only buy one stamp or a couple of stamps, the pricing is enough to cover our costs [85 cents to $1]. But if you are a large mailer, you are going to take advantage of the lowest bracket[about 69 cents], Chopra said.

He said that puts the price of a stamp in Canada at about the average for G7nations.

Asked if there was privatization in Canada Posts future, Chopra said it was too soon to tell.

The company first has to make sure it can live with the key principle not being dependent on taxpayers, he said.

To do that, we have a lot of work to do. Our work is cut out for the next cycle and thats where all the focus is right now.