Evidence of meeting #48 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was service.

On the agenda

MPs speaking

Also speaking

Nelson Leong  Chief Operating Officer, Manitobah Mukluks
Maureen June Winnicki Lyons  Owner, McQueen and Mo Mater
Glenn Bennett  President, Prairie Region, Local 856, Canadian Union of Postal Workers
Gord Fisher  National Director, Prairie Region, Canadian Union of Postal Workers
Daryl Barnett  Director, Labour Relations, AIL Canada
Dave Sauer  President, Winnipeg & District Labour Council
Kevin Rebeck  President, Manitoba Federation of Labour
Carlos Sosa  Manitoba League of Persons with Disabilities
David Camfield  Professor, Labour Studies and Sociology, University of Manitoba, As an Individual

8:30 a.m.

Conservative

The Chair Conservative Tom Lukiwski

Colleagues, I call the meeting to order.

We may be missing one of our panellists, but thank you very much to the panellists who are here. I'll give a few words on how the process will work today.

As you probably know, the minister responsible for Canada Post, the Honourable Judy Foote, has initiated a fairly extensive consultation process in two phases. Phase one was the establishment of a task force whose mandate was to examine the financial sustainability and viability of Canada Post. Phase two was a cross-country consultation with Canadians, talking to individuals, organizations, municipalities, in communities both urban and rural, remote communities, first nations communities, asking them their views on the future of Canada Post and, more specifically, trying to get recommendations and suggestions on how Canada Post can improve not only their service but also their financial viability for the future.

That's why both of you are here today. We thank you for your appearance. The process we follow is fairly simple. We will ask each of you to make a very short opening statement, five minutes or less, followed by questions from all of our committee members. Your testimony will help us form part of the final report we will be submitting to Parliament later in November.

With that, we will start with Mr. Leong for five minutes, please.

8:30 a.m.

Nelson Leong Chief Operating Officer, Manitobah Mukluks

Hi. My name is Nelson Leong. I'm the COO of Manitobah Mukluks. We are one of the fastest-growing companies in Canada. We've been in Profit 500 over the last couple of years.

We have a very good relationship with Canada Post. We have benefited from Canada Post by having them deliver a superior customer experience to our customers.

I would refer you to some of our recent customer feedback page responses. We get a lot of these responses from our customers. At least 20 give feedback every day. You can see one comment here, which starts off talking about our products: “My first impression of them is very positive.... I just wish you didn't ship through Purolator. It made it difficult to get my boots as compared to if you shipped through Canada Post.”

Our e-commerce business has grown significantly over the last four years. We have been very successful because we have been able to reach out and have our products delivered in the most rural areas where no one else would deliver—not Purolator, not FedEx, and not UPS.

Canada Post has provided us with commendable delivery execution to our customers. This includes 100% coverage of Canadian addresses; a range of delivery options for most budgets; convenient return solutions, no matter where our customer is located; and extensive delivery experience to markets within Canada. We are currently in negotiations with them to continue to serve our Canadian customers, both the indigenous and non-indigenous population.

Not having Canada Post deliver our services would have a huge impact. It would be detrimental to us as a company and to all of our customers who love our products and services.

Thank you.

8:30 a.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much.

Next up, we have Ms. Lyons for five minutes, please.

8:30 a.m.

Maureen June Winnicki Lyons Owner, McQueen and Mo Mater

Good morning.

My name is Maureen Lyons. I have been a toy seller on eBay in Winnipeg since 2012, with a store called McQueen and Mo Mater.

While currently I have 1,000 items available for sale, I consider myself to be a small-time seller on the small and medium-sized business spectrum. However, the income is necessary nonetheless. I'm a mother of four and my partner is self-employed, so every penny counts in our household. I would assume that this is the case for many small sellers on eBay. Regardless of our ages or circumstances, we are supplementing our modest incomes with eBay sales.

To date, my store has shipped about 1,500 orders through Canada Post. Postage is my largest single expense. By the end of this calendar year, I expect that amount to exceed about $20,000. Approximately 90% of postage for my customers is purchased through eBay's arrangement with PayPal shipping to gain a modest discount through their volume customer contract, while the remainder is spent on domestic Lettermail directly at my nearest authorized postal agent.

As I read through the discussion paper, “Canada Post in the Digital Age”, I noted with interest many of the issues that it detailed. I thank you for preparing that report and for allowing me to be here today to speak about my dependence on the healthy operation of our national postal system. Without Canada Post, I lose the ability to conduct business as an online seller.

Believe me, over this past summer, I tried to shake my dependence on Canada Post. Unlike many of my counterparts on eBay, I made a conscious decision not to close my store during the long period that there was uncertainty about the labour situation. I developed a contingency plan and I put it into operation. It was to offer local pickup for regional sales, courier service for domestic orders, and day trips south to utilize the USPS for international sales. Considering that a round trip to the United States to mail a parcel is, for me, a 232-kilometre journey, you must understand that this was a decision I did not lightly make.

Even so, half of my customers are Canadians, and they avoided, as did I, all shopping online during the summer. This has extended into fall. Normally by mid-October to late October my sales are brisk, and with the holiday season approaching, my business is still floundering.

Canadian small businesses need CPC and CUPW to develop a long-term arrangement that will provide consistent, reliable service to all Canadians. The disruption that labour strife caused extended beyond the strife itself. The other half of my customers are international, and nearly equally split between the U.S.A. and overseas. Those customers, for the most part, remained blissfully unaware of our labour strife, which brings me to a sore point: the cost of service by Tracked Packet.

No one believes it costs three times as much to mail something via Tracked Packet as it does by small packet air mail when both deliver at the same speed, generate the same bar codes, and are scanned and entered into CPC's system at the counter. If the issue is one of liability, please instead reduce or eliminate the amount of included insurance with Tracked Packet and leave it up to the individual sellers to purchase at additional cost. Having insurance included is not value added for most sellers, since it's not usually the tracked items that get lost en route to their destinations. We need delivery confirmation more than we need insurance, and we need it to be affordable.

When I asked other eBay sellers what question they wanted me to offer you today, they raised a hue and cry of more affordable tracking and more tracked options. It's difficult, if not impossible, for Canadian eBay sellers to be competitive against our American counterparts. The price of postage puts us at a steep disadvantage. That goes across the board, but is most glaring with the absence of a traced Lettermail category between regular domestic Lettermail and a full-fledged parcel.

We're asking for delivery confirmation for an extra dollar or two, if possible, on oversized Lettermail that still ships in an envelope under two centimetres thick. We can all see that parcels are the way of the future, e-commerce is the way of the future, tracked solutions are the way of the future. Buyers expect tracking, sellers expect tracking, and sales platforms require it for logistical metrics.

I can say with all confidence that all eBay sellers with whom I have discussed the issues facing Canada Post think the same thing: let us grow together and not apart.

8:35 a.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much, both of you, for your presentations.

For the benefit of our committee and our panellists, we also expect a representative from the Manitoba Chambers of Commerce to be with us on this panel. She has not arrived yet. I assume she may be in transit. If she arrives, we will put her at the witness table and have her statement in the middle of the meeting. Until then, we'll commence with questions.

Mr. Whalen, we have you up first, for seven minutes, please.

8:35 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

Thank you very much, Mr. Chair.

Thank you both for coming. It's great to hear from the true customers of Canada Post, the people who are making their enterprise by sending packages through the service. It's the one area that's clearly growing and represents their primary future revenue source. Quality, logistics, and international rates are all areas where the committee has concerns about the way in which Canada Post might be able to improve its operations.

Ms. Lyons, can you describe for us a little more about your international sales—how Canada Post pricing makes you less competitive versus your U.S. online seller counterparts, how it might make you less competitive against Chinese counterparts—and ways you think the service could be improved?

8:35 a.m.

Owner, McQueen and Mo Mater

Maureen June Winnicki Lyons

I don't know, aside from reducing the cost associated with tracked options. I know there are a whole host of reasons why that's not easily done. It really would be beneficial if we could have a domestic, traced Lettermail option for Canadian sellers.

As far as I can see when I discuss this with my counterparts on eBay, the difficulty that Canadian sellers are facing is that when we can offer free shipping, it's really limited to Lettermail because all most of us can really afford to pad into our asking price is about two dollars. If we try to send something by Expedited Parcel, which is available to us through PayPal shipping at a discount, then we need to incorporate up to about $15, on average, into the asking price, just to be safe. If a Canadian buyer is looking at a similar item from an American seller, the international rate of getting it delivered across the border, providing they don't get assessed the import fees, is still similar. They feel that it's maybe not a good value to buy from a Canadian seller because the asking price is higher.

I don't want to assume that all my buyers aren't sophisticated enough to figure out that free shipping means that shipping is included in the price, but the truth of the matter is that not all buyers do realize that. They just think the Canadian sellers are asking too much. They consider the American purchase price to be a better deal, even though they have to pay more for shipping, potentially.

8:40 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

We've heard about other sellers in other parts of the country pre-shipping to the U.S. and then having their international shipping handled out of a U.S. distribution point using United States Postal Service or another courier. Have you investigated that? How feasible would that be? How much would that save you if you did it?

8:40 a.m.

Owner, McQueen and Mo Mater

Maureen June Winnicki Lyons

I'm afraid I don't know, because in Winnipeg we don't actually have access to that sort of service. As far as I know, it's isolated to an area in B.C. and another in Ontario, and one of those two was a recent addition. I know that the sellers who do utilize that service swear by it. They feel that it's a good value added for what it costs them to actually get to that shipping depot. They feel that they can then offer a more competitive rate to their customers, but those would be primarily their American customers. It's a tracked option for them, too, through the whole system.

From an eBay seller's point of view, the only real hindrance to that kind of approach—because it pays off in terms of the competitiveness for the American customers—is the handling time. We have an internal metric on eBay that requires us to ship within our stated handling time. If you hand that parcel off to an intermediary who's responsible for getting it into the American postal system, it can add extra handling time to your handling time, and then you potentially end up falling behind in your late shipment defects.

For the sellers to whom that option is available, I'm hard pressed to think of any who don't use it.

8:40 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

Okay, so it seems that if you want to use Canada Post and have a tracked option, you're priced out of the market.

8:40 a.m.

Owner, McQueen and Mo Mater

Maureen June Winnicki Lyons

Essentially, yes, unfortunately.

Just off the top of my head, with my PayPal discount, the price of tracked packets starts at about $14; maybe it's $14.35 or $14.65. For an American seller shipping within the States, it's a couple of dollars. It's very easy for them to include free shipping. It's hard for Canadian sellers to compete against American sellers, both domestically and internationally, for those reasons.

8:40 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

Mr. Leong, I have the same question for you. When you try to source your shipping supplier for sales outbound to the U.S. or within Canada, are there particular pressure points for you? How is the Canada Post infrastructure not maximizing your ability to reach customers?

8:40 a.m.

Chief Operating Officer, Manitobah Mukluks

Nelson Leong

To be honest, when we ship our products to the U.S., we use FedEx, only because they have a better tracking system for us when we ship from Canada to the U.S. We try to minimize our costs by using three carriers, but for the most part, the most rural areas are really impacting us because no one else goes there except Canada Post.

8:40 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

What percentage of your sales would be to rural and far rural Canada versus domestic, urban Canada, versus the U.S. and international?

8:40 a.m.

Chief Operating Officer, Manitobah Mukluks

Nelson Leong

Probably between 7% to 10% goes to the U.S., and then the rest is all in Canada. Of the 90% that we ship within Canada, it is roughly a 50% split for rural and non-rural areas.

8:45 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

I'm not sure if you're aware of this, but Purolator is 92% owned by Canada Post.

8:45 a.m.

Chief Operating Officer, Manitobah Mukluks

8:45 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

If you have problems with Purolator, I guess indirectly Canada Post might be able to help them improve their service.

8:45 a.m.

Chief Operating Officer, Manitobah Mukluks

Nelson Leong

That's correct.

8:45 a.m.

Liberal

Nick Whalen Liberal St. John's East, NL

When we talk about the future of Canada Post, we're trying to find ways for them to improve revenue and trying to find suggestions along these lines. You were talking about actually providing the services they currently provide at more competitive rates.

When we talk about Canada Post, either as part of the national infrastructure or as its own separate stand-alone corporation, how much appetite would you have for subsidies for Canada Post? The government would provide a subsidy for Canada Post in the same way it does for CBC or other crown corporations that aren't really in the money-making business.

8:45 a.m.

Conservative

The Chair Conservative Tom Lukiwski

Because of time, could you both please give a very brief answer?

8:45 a.m.

Owner, McQueen and Mo Mater

Maureen June Winnicki Lyons

Anything that could make us more competitive as e-Bay sellers would be welcomed. Absolutely.

8:45 a.m.

Chief Operating Officer, Manitobah Mukluks

Nelson Leong

I have the same comment.

8:45 a.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much.

You're next, Mr. Clarke.

Those of you who may not be bilingual may want to put on your translation headsets.

Mr. Clarke, you have seven minutes.

8:45 a.m.

Conservative

Alupa Clarke Conservative Beauport—Limoilou, QC

Thank you, Mr. Chair.

Good morning, everyone.

I have one question for each of you, but I will start with Mr. Leong.

Are you familiar with the five-point action plan that Canada Post proposed in 2013 to ensure the long-term sustainability of its activities and budget? Are you familiar with the various measures in the plan?