Should the government get out of the mailing business? There have been calls for this initiative for years due to consistent quarterly losses and debt problems that many public postal agencies face. With less people sending Transaction Mail (snail mail) and opting for electronic means, how much longer can an agency, like Canada Post, survive?
On Tuesday, Canada Post announced a pre-tax loss of $10 million in the second quarter ending Jun. 30, according to a news release
from the Crown Corporation. This $10 million figure is less than the $18 million loss from the same time a year ago.
Due to the lockout from last summer
, however, these results appear to be less brutal, according to the postal agency.
Meanwhile, the cost of operations rose by 6.1 percent, or $85 million, to $1.47 billion. Transaction Mail declined by 4.4 percent, or 31 million pieces, mostly due a vast number Canadians opting for electronic substitutions and fewer individuals mailing packages.
Direct Marketing mail volumes were flat when contrasted with 2011, but compared to the same time in 2010, the numbers dropped by 5.5 percent, or 140 million pieces. The agency’s e-commerce orders, though, grew by an unspecified amount, but officials note that it was not enough to offset the less than stellar performances in the other departments.
Another primary issue facing Canada Post is its $4.7 billion solvency deficit in its pension plan. Close to three quarters of its overall costs are related to labour, which is why the company says it needs to complete a collective agreement with the Canadian Union of Postal Workers (CUPW).
“It’s time for us to have some realistic discussions based on the current realities we now face,” said Jon Hamilton, Canada Post’s director of communications, in an interview with the Globe and Mail
. “The decline of mail is not something that’s going to rebound. Canadians are using Canada Post in different ways. Their expectations of what Canada Post can offer are different and we need to adjust for that.”