Canada Post to end home delivery

0:00Canada Post saying it's moving ahead with the restructuring plan mandated by the federal government in the fall Which could permanently end door-to-door male delivery? Ian Lee is a business professor at Carlton University in auto-on He's also reached research rather than a decline of Canada Post Ian always appreciate you being here My pleasure Brad You've been yeah, you've been warning for years, you know that Canada Post business model is unsustainable So is ending home delivery the moment Canada Post finally admitting that? Yes, yes, I think it is I I've been studying this up. I did my PhD thesis on the Canada Post. I defended 89. It was 850 pages from the beginning when it was created up until it was Transformed into our crown corp, but I don't want to go into my own history I did two updates since then for two think tanks and and I used only the audited annual Reports of Canada Post abled in the problem of the Canada because some people say well

1:01This is Ian Lee's opinion these numbers. They're not my opinion. They're the audited numbers year by year by year Knowing that leather male has been declining at between 6 and 8% a year every year without exception since 2006 70% of the volume the physical pieces of male have vanished from the post office Millions and millions and millions of Canadians are using the post office less and less and less and we all know the answer It's because of cell phones is because of smartphones. We don't write our mother or father or grandmothers or grandfathers with letters We text them. We phone them. We mail them. We you know, so that's what's what's driving this the post office is losing over a billion Dollars a year is being bailed out Government called it an investment. It is not an investment the government taxpayers will never get that money back It's going into this hole in the ground is so to speak and the new prime minister a prime minister carning said last fall

2:04He and the government are no longer willing to subsidize it indefinitely into the future They've got a restructure which is polite word language or down Sizing and laying off significant numbers of people because less and less people use the post office You know, and it really put it into perspective for myself The last six weeks about six weeks ago my apartment building had a break in and they went after The mailboxes so they were all screwed up and you know the apartment building had to order parts to get it fixed And we were temporarily put to another location to go pick up our mail in six weeks in I went there once to pick up the mail because I was actually expecting some important documents But aside from that myself and my partner had no need to go to the post office and just walking around the apartment building I heard nobody complaining about this You know makeshift office temporarily for us to go grab our stuff You're absolutely right and I don't want any of your listeners or anybody who works there to think I'm trying to beat up or I've got some

3:08Malice against the post office. I don't it's just that we have moved. I grew up in the old. I'm a boomer I grew up in the old. I call it the analog society if that's too fancy a word How about the world of file cabinets and printers and envelopes and stamps Those that world's gone Nobody does that anymore. I used to get a paycheck a physically printed paycheck back in the 80s and I would physically walk it to the bank and put it on deposit Seriously, well who on earth gets a paycheck I mean, it's all electronically credited to our bank accounts 96% of all the pensions of all the checks of the government of Canada and they used to issue a huge amount of checks Old age pension checks, Canada pension checks all electronically deposited You go to the CRA and look at the stats are on their website 95% of Canadians file their tax returns online once upon a time not so long go people would mail their tax return into the CRA

4:10So our whole world is changed young people know this inside now And you know the older the occasional older personal right me and say you don't understand there's all kinds of people using The post office night. I don't I'm not being Angry if I just say listen if you really don't believe me Go talk to your grand children Ask them how many letters they write each week. Can you know what the answer is? I know the answer I've grandchildren the answer is Whoa Well, and you know, you know, Ian we talk about Canada post and the digital shift and it just seems overall as a corporation Canada post often seem to be Behind the eight ball whether it's something about the digital shift which we've just covered over the last two minutes But also the e-commerce boom they didn't seem to catch up to that at all They didn't they missed the boat completely in fact. I did When then Frito a Prime Minister Frito Set up the Blue Ribbon panel back in 2016 to look at the future I was invited to appear along with many other people and I said look you got a pivot like really very fast

5:15To parcels and become really really competitive because that is the future if there is going to be a future Why stats can was showing and that data is still good today e-commerce is growing at nine to ten percent a year every year So the number of parcels is going through the roof and so I said your future is to be the e-commerce partner For the partner of the e-commerce companies and while they certainly did set up a parcel division They never I don't believe they ever took it seriously They they treated it as sort of a very secondary product line and they were focused continued to focus on letters Even though letters were collapsing from 2006 So they squandered the last ten years they had a huge opportunity to pivot and shift and focus On e on parcels and and and downsize in terms of the the mail side They didn't let me quick figure for you in the last ten years when their letter physical letter mails went volumes went down

6:1970 percent Their headcount went up up They're they're volumes are going Anybody listening runs a business those what I'm talking about your business goes down by 70 percent So you you go and hire more people this doesn't make sense No, if you're going down you you you gradually incrementally Shed some people you maybe have a few hiring freezes to adjust the headcount to the volume a demanded of your company They went in the opposite direction. They squandered the opportunity No, you know Ian like I talked about my experience a few minutes ago about not having to to go get my mail and a sort of Makeshift post office because of the the breaking at my apartment building, but you know there There will be people out there. There are people out there who will miss door-to-door delivery You know, I think about rural communities. I think about seniors. I think about the disabled community. How do they adapt? You know, I looked again, and I don't want anyone to think I mean I've already said I used all the data from the Canada post of course

7:20But I also used other government data. I went to the CRA and said how many are following their tax returns online I went to service cadents that how many of your checks were presented Then I went to the camp payments association Which is a crown corporation of the government of Canada that runs the clearing system and they produce Unbelievable statistics every year on paper checks versus digital pay transfer of funds versus Credit card use versus debit card use etc etc And and so what I I did that was because I wanted to see if this was going on across the society And and so it was this this again this this phenomena this trend has been going on for the last 15 years And so the the evidence was out there or stats or excuse me for Canada post to respond But as I said they they didn't and and they lost their share in in parcels because they were not as Nimbler dynamic at the private courier companies and and they and and so this is their problem now is that they they're so late to the game

8:23They've got to turn themselves around and become competitive with these private firms But they've been in denial right up until very very recently But the need to do so and so what I'm suggesting is either they're going to pivot and become competitive Or they're going to disappear like blockbuster video did when streaming came out in the late 90s Well, that leads into the perfect question before I get you out of here Ian and that is you know Canada post does it remain a crown corporation or is it time to consider privatization? Well, in a sense it's already being privatized By us by us refusing to use it and so I don't think anyone would want to buy it because the aisle Let me go further. I'm predicting now. This is a prediction not based on on not written down anywhere But based on the decline of the past 15 years of letter mail. I am predicting that within 10 years from now Letter mail will vanish from our country

9:25That means no community mailboxes. It means no letters and for any way that's way too radical Denmark okay, it's a small country, but still Holding six months ago then asked we are no longer going to deliver letters We will no longer collect letters. We will no longer provide a letter service Why because the demand had collapsed and so the its Canada post is going to have to Transform themselves into a parcel company or I predict they will go to business because Karni has said my mr. Karni has said we are not going to give you a billion dollars a year So they're going to and home delivery. I predict they're also going to reduce five day a week delivery to the 18 million addresses and Canada Business and residential they'll get down to two or three days a week as an interim solution until mail vanishes And at the end on top of that they're going to close a lot of post offices probably turn them into franchises You know shoppers drug mart or law blogs because they want the volume

10:27The traffic to come into the store to maybe buy their other products and so they're going to do this This will not save the post office. It will stop the patient from bleeding to death They're hemorrhaging right now. What they got to do is a stop the bleeding to death To pivot and reinvent themselves as a parcel post company. Those are both daunting tasks ahead of them, but they've got to do both Ian good stuff as always. Thanks so much for the time Thanks very much. Thank you. That is Ian Lee business professor at Carlton University in Ottawa He's also researched the decline of Canada post talking about Their memo recently that they are going to move ahead with the restructuring plan mandated by the federal government in the fall Which could permanently end door-to-door mail delivery