Evidence of meeting #53 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 post.
A video is available from Parliament.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I can't say I'm terribly excited about helping Farm Credit Canada, but it's really more a question you'd have to ask them.
Senior Policy Advisor, Canadian Credit Union Association
They're not in the deposit-taking business, so they have a limited suite of products. But there are other equally viable models to partner with, credit unions or other institutions, too, not necessarily postal banks. We already provide a lot of, say, agricultural products and services for our members, for example, AgriInvest accounts. We might be able to partner in some way with FCC around that.
Conservative
The Chair Conservative Tom Lukiwski
Gentlemen, thank you very much for being here, for taking time out of your day to be with us. Should our committee members have any additional questions—and God, I can't think that they would after two hours—I hope you would invite them to contact you directly.
Conversely, if you have any additional information—clearly you have a point of view, particularly on the issue of postal banking—you wish to provide to us that you think would help us in our deliberations, we invite you to do that through our clerk.
We will now suspend for no more than just a few moments, hopefully. We have to make arrangements for a video conference for our next set of witnesses.
The witnesses are excused. Thank you.
Conservative
The Chair Conservative Tom Lukiwski
We're running a little over time, but I think we can make up time.
Ms. Falcone and Mr. Druker, thank you both for being here.
You may or may not, Mr. Druker, have been observing the proceedings. Ms. Falcone, you probably haven't had a chance to see how we work around here. We will be asking both of you to give a brief opening statement. Following those statements, we will engage in a question and answer period with members of the committee.
Mr. Druker, how long is your statement?
Conservative
The Chair Conservative Tom Lukiwski
Thank you very much.
We will commence with you, Mr. Druker, for five minutes, please.
President, The UPS Store, UPS Canada
Thank you, Mr. Chairman.
Thank you members of the committee. I greatly appreciate the opportunity to be here today.
My name is David Druker, and I'm the president of MBEC Communications, which is the licence-holder for the franchise operations of the UPS Store in Canada. We are a network of approximately—at last count, since I think we opened another store today—365 full-service retail locations offering multi-carrier services. We exist, basically, to assist consumers, small businesses, and Canadians in finding the right solution to serve their carrier shipment needs. We also do printing and some other business support services. We're really an easy one-stop location. The franchisees are all generally individual Canadian families supporting their own businesses. It's really a small-business organization supporting small business in Canada.
Most recently, going back about four years in the United States, they have successfully done pairings whereby the U.S. Postal Service parcel shipment options are available at the UPS stores in the United States, and that has been beneficial for both parties. It has created an easy solution for consumers and small businesses to find the appropriate selective service that they require for their individual needs.
We are a multi-carrier in nature. We are basically agnostic as to which carrier it goes through; currently we offer DHL, Canpar, UPS, obviously, and Loomis, and we offer different courier packages. Historically speaking, we were previously Mail Boxes Etc. and there was a rebrand done with a brand affiliation with UPS. UPS is our preferred carrier based on the brand association, but we are an independent organization of independent franchisees—Canadians selling solutions to Canadians.
We have tried for several years—I would say a good eight plus—to have a dialogue with Canada Post as to the mutual benefit of offering these services, and we have not to date been able to get very far with that. So given the recent suggestions that Canada Post is looking at new ways of expanding its business, expanding its product offerings to Canadians, and expanding what it does, we believe that our locations offer the ability to put parcels into the Canada Post carrier network.
We currently do, at retail, approximately $35 million to $45 million of parcel service, and we believe that Canada Post could benefit from some of that volume.
Conservative
The Chair Conservative Tom Lukiwski
Thank you very much.
Ms. Falcone, could we have your opening statement, please.
Cristina Falcone Vice-President, Public Affairs, UPS Canada
Thank you, Mr. Chair.
UPS is pleased to participate in the Canada Post task force review. I appreciate the opportunity to speak before the committee.
UPS believes this review process presents an opportunity for the government to reshape Canada's parcel delivery infrastructure into a more streamlined, harmonized, and innovative system that will better serve Canadians. UPS will respectfully build on the task force review and advance three recommendations today that we believe will help create efficiencies in parcel service while additionally supporting Canada Post revenues.
First, UPS supports the task force option to explore synergies with the private sector through final mile collaboration and an open community mailbox infrastructure. The discussion paper suggests that Canada Post pursue additional last mile delivery for third parties. UPS believes this represents a significant opportunity for Canada Post. In fact, final mile delivery service is the fastest growing product in the USPS product portfolio. We see opportunities for Canada Post to collaborate with transportation partners on the challenge that the entire transportation industry faces when it comes to final mile delivery by opening up access to its vast final mile delivery infrastructure, including its community mailbox structures.
By opening up its infrastructure, Canada Post would benefit from cost sharing with industry colleagues and gain greater access to new courier technologies. This is a best practice that is already under way in other parts of the world. In France and Belgium, UPS and national post operators are working together on local pilots to experiment with modified parcel boxes and advanced parcel technologies.
In Singapore, the government is currently in consultation with the postal service and private couriers to devise a pilot program of government-run federated mailboxes. Singapore intends to use this model to create revenue for the government, solve problems such as urban access and congestion, and improve the movement of e-commerce.
In the U.S., the Government Accountability Office is currently assessing whether shared-access mailboxes would better serve the American consumer in today's digital marketplace.
Second, UPS recommends a more consistent duty and tax collection policy for import parcels. The task force identified the need for new revenue streams for Canada Post and also stated that there should be greater consistency in the industry. Currently, there's a gap in the revenue collection process on postal import parcels as compared to parcels carried by couriers.
In fact, preliminary results from a study currently under way by Copenhagen Economics indicate a disparity in the application of duties and HST assessments completed by Canada Post versus private couriers for import shipments to Canada. The final results of the report will be complete within two weeks, and UPS can share additional information then.
Moreover, Canada Post has an opportunity to increase its revenues by increasing the terminal dues that it charges to international postal entities when receiving parcels into Canada. Canadian terminal dues are relatively low when compared to the cost to serve. An increase in terminal dues would help Canada post manage its costs while ensuring that international companies are not gaining competitive ground against Canadian businesses selling domestically.
Finally, UPS supports the option presented by the Canada Post task force review committee to change Canada Post's governance structure to introduce an independent Canadian postal regulator. A postal regulator would ensure that fair and competitive structures are in place within the relatively unregulated courier and parcel sector. As the task force discussion paper states, “there is a need for enhanced regulation to provide structure balanced between the public interest and in response to competitive market forces”.
Similarly, we see the implementation of a regulator as mutually beneficial to both Canada Post and the private courier industry. Canada Post could update the rural moratorium, streamline its operations, and explore a greater partnership with the private sector. The private sector could be assured fair competition via a more transparent cost allocation process that shows Canada Post is not cross-subsidizing its competitive business lines from its exclusive privilege. Most importantly, Canadians would be assured that their postage fees are being optimized to ensure that Canada Post is fulfilling its letter mail service mandate. UPS urges this government to look toward best practices in Europe, Australia, the U.S., and the U.K., and implement an independent postal regulator for Canada.
In conclusion, we believe the recommendations brought forward today would ensure increased parcel access for Canadians, grow revenue for the federal government and Canada Post, spur innovation, and provide Canadians with the assurance that Canada Post is being managed effectively for today and into the future.
Thank you. I look forward to your questions.
Conservative
The Chair Conservative Tom Lukiwski
Thank you both for your presentations.
We will start the seven-minute round with Madam Ratansi, please.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Thank you both for your presentations.
When you talk about UPS and the store, there's a confusion. The store is a little different from UPS itself. Is that correct?
President, The UPS Store, UPS Canada
That's correct. The UPS Store is an independent franchise network that has a branding agreement. We serve multiple carriers, not uniquely UPS. We are not UPS employees. We are not UPS shareholders.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
You said that you would like to synergize with Canada Post, yet you haven't had any conversations with them. What sort of service do you think you could leverage from each other that would be beneficial to Canada Post and a win-win situation for you and them? How much revenue do you think it would generate for Canada Post?
President, The UPS Store, UPS Canada
We believe that by offering the ability for Canadians to do Canada Post parcel service out of our locations, there would be a benefit to Canada Post. Our initial estimates are that, based on market share, there's easily $1 million of volume available. The benefit to Canada Post is the increased volume. The benefit to Canadians is increased accessibility and increased selection.
As I said previously, we exist basically as a multi-carrier option. We try to listen to the consumer or the small business and assess what their needs are. Some people have an absolute need to have a package or a letter arrive by 8 a.m. the next day. Other people only have a need to have a three-day, or maybe a five-day delivery, or ground service. By increasing the selection we have available to Canadians, we're helping to support small business, consumers, and Canada Post, as well as our franchisees.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
With all the multi-courier offers you give to your clients, Canada Post has never been part of the equation or the conversation.
President, The UPS Store, UPS Canada
No. We've had initial conversations that have basically gone to the tune of, “Thank you, but not at this time.” They've been very brief.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
There are opportunities for enhancing their revenue, but they have declined.
President, The UPS Store, UPS Canada
We would assume there are opportunities for the enhancement of revenue. Based on the experience with the USPS in the stores in the United States, we believe that proof of concept is certainly a worthy exercise.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Okay.
With respect to UPS, I just want to know, Ms. Falcone, how much business you give to Canada Post in its ability to do the last mile. The last mile is the strategic advantage that Canada Post provides to all its customers, really. How much business do you supply?
Vice-President, Public Affairs, UPS Canada
Most of that right now is done through other regional couriers that are then handing off to Canada Post, including Purolator Courier. We would hand off to Purolator and they would handle that last mile hand-off to Canada Post at the moment.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Do you know how much of the volume or the dollar amount you are handing off to Canada Post because you don't have the infrastructure to do the last-mile delivery?
Vice-President, Public Affairs, UPS Canada
It's a lower percentage of our total volume in Canada. I can get back to you with that.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Fair enough.
When you talked about opening up its transportation service, what did you mean by it?