Government Operations Committee on May 29th, 2024

[Anita Anand]

Thank you.

[The Chair, Conservative, Kelly McCauley]

We will suspend for about five minutes or so to set up our next round of witnesses.

We are suspended.

[The Chair, Conservative, Kelly McCauley]

Welcome back, everyone.

We are back in session.

We would like to welcome our friends from Canada Post.

Mr. Ettinger, welcome to OGGO. We appreciate your joining us.

We'll turn the floor over to you for five minutes for an opening statement. Please go ahead, sir.

[Doug Ettinger, President and Chief Executive Officer, Canada Post Corporation]

Thank you, and good evening, Mr. Chair.

I'm joined today by my colleagues Manon Fortin, our chief operating officer, and Rindala El-Hage, our vice-president of finance and our comptroller.

Thank you so much for having us today, and to the committee for undertaking this very timely study on the postal service in Canada's rural and remote communities.

The work you're doing is very important.

I look forward very much to this report.

Like so many other businesses, Canada Post must adapt to the dramatic changes in how Canadians live and work—and shop, in our case.

Our recently released annual report makes it crystal clear that the postal service is facing major challenges financially and operationally. My focus is on how we can best meet the needs and expectations of Canadians both now and into the future with a focus on them, our customers.

Canada Post provides a service and a network that Canadians consider essential. We connect all 17.4 million addresses daily in the second-largest country in the world. We connect our country and our economy. Canadians depend on us because we deliver everywhere—not just where it would be most profitable for us.

Our service can be a lifeline for many Canadians. For small businesses, it allows them to compete in a market dominated by large, multinational e-commerce giants. For Canadians in rural and remote areas, Canada Post is one of their only delivery options. As the postal system changes, these rural and remote communities cannot get left behind.

We have to be there for them; we want to be there for them.

By now you've seen—and we've seen—our financial results, so I won't get into all of the details, but let me highlight a few of our challenges.

First is lettermail, which used to be our primary revenue source but continues to decline, as it does around the world in this advancing digital age. In 2006, each household received an average of seven letters a week. Last year, it was just two.

At the same time and going in the opposite direction, a growing population means that we deliver to more addresses every year—in fact, three million more compared with 2006. More addresses mean that our delivery costs continue to rise, and, year after year, the financial gap between the price of postage and the cost of providing the service widens.

We've also seen challenges in parcel delivery. Parcels are the very future of the company, and we've been making critical investments in service and capacity to better compete. Last year, these investments helped us achieve some of our best-ever service performance results in our entire history.

However, the parcel delivery market has become hyper competitive. We're going head-to-head, toe-to-toe against established global players and low-cost new entrants that emerged through the pandemic. As a result, our parcel delivery market share has been cut by more than half since 2019.

Mr. Chair, Canadians need a strong postal service, particularly in rural and remote communities.

We need to adapt quickly to be there for them.

For this important study, let me offer my thoughts on what a future Canada Post could look like.

To me, it requires the following.

Number one is becoming much more nimble and innovative, focused on the changing needs of our customers.

Number two is being able to invest in priority areas such as our network and bringing our legacy systems out of the Dark Ages, further improving safety for our people and continuing to green our operations.

Number three is having a delivery model with the flexibility to offer weekend deliveries, next-day deliveries and other innovative services that Canadians want.

Number four is making our post office network more small-business friendly and an easy-to-access growth hub for Canada's budding entrepreneurs.

Lastly, number five, we need a refreshed regulatory approach that provides flexibility to act quickly in today's hyper-competitive parcel market, while providing the appropriate checks and balances in terms of government oversight.

That's my vision for modernizing Canada Post.

Canada Post will continue to be there for all Canadians and Canadian businesses. We will keep working hard to evolve the postal system to reflect how Canadians use our service today and, more importantly, how they're going to use it tomorrow.

Significant change is required urgently and we're prepared for and committed to leading this change and working closely with the federal government and our bargaining agents. Canadians expect us to work together—in your roles as legislators and ours as management—to find workable solutions to evolve and preserve this great national infrastructure.

I look forward to our discussion.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll start with Mrs. Block, please.

Go ahead.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Mr. Chair.

Through you to Mr. Ettinger, welcome here.

I think this is our second or third meeting for this study regarding Canada Post, and I'm looking forward to hearing your answers.

Sir, can you answer this for us: What has been the biggest obstacle to Canada Post's modernizing over the last eight years?

[Doug Ettinger]

Thank you for that question. I appreciate that.

Really, as I mentioned in my opening remarks, our delivery costs have been going up substantially and addresses have been added as we've been growing as a country. The costs on that are very significant. As you know, we deliver to every address every day. We're proud of that. We're pleased to do that, but the cost of being everywhere every day is getting higher every day.

At the same time, our revenues have been falling in terms of lettermail, which is our most profitable line of business. It's put us in a tough position financially in terms of our having adequate funding over the long term to make the kind of changes we need to make to modernize this company.

It needs to be modernized. It needs to be more agile. It needs to be more flexible. When I say “flexibility”, I mean regulatory flexibility, but also in areas of investment and decision-making.

We're in a category against some of the best competitors in the world and we have to be moving fast. I'm confident we can compete with them, but it needs to be a different model to do that.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much. I appreciate that.

In your opening statements you used terms like “being able to invest” and “a refreshed regulatory approach”.

We've been made aware that Canada Post has not had a corporate plan approved since 2019, which is prior to the pandemic.

How much damage has been done to Canada Post by the lack of a corporate plan over the last five years?

[Doug Ettinger]

Thank you for that.

We've been working very closely with the government on the plan. Our last corporate plan was submitted last fall—in fact, early for 2024 to 2028. It outlines the challenges in that in great detail.

We've not been able to find alignment to get approval, but we're working with the government on a new plan. We're joint stewards of Canada Post. We're working together to try to find the right solutions. The minister and I have a good working relationship.

Right now, the focus is on short-term measures to make sure that we continue to be viable in the next few years in terms of financing, borrowing and pricing flexibility, so that we have the adequate amount of funds to continue to turn around this company.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

With this misalignment that you have between Canada Post and the Government of Canada or the minister with whom you are negotiating to get an approved plan, what seems to be the main issue in that misalignment?

[Doug Ettinger]

As you know, in the laws that govern Canada Post, we have to operate in a financially self-sustainable manner, which is a good thing to have in place. We have submitted all of our plans from a business standpoint based on the need to have a long-term, financially sustainable company, breaking even or even getting past that—but mainly to break even.

However, we have not found, in that process, the alignment that both of us are comfortable with.

Again, we're continuing to work hard on it. In the meantime, we're changing, upgrading and modernizing what's within our control.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I represent a very large rural riding in Saskatchewan. My constituents have repeatedly raised the issue of Canada Post's long-term effort to change over addresses to civic addresses for the purposes of delivering the mail. I know that this is being replicated across the country in rural Canada.

Do you have a timeline for when this initiative will be completed, and can you tell us the difficulties facing Canada Post in getting this done?

[Doug Ettinger]

I'm going to pass that over to Manon Fortin, our chief operating officer, to answer, if I can.

[Manon Fortin, Chief Operating Officer, Canada Post Corporation]

Thank you, Doug.

We are constantly reviewing our network to assess where changes need to be made to improve service to the 17 million addresses—not just urban communities but also rural and remote communities.

We have hundreds of civic-addressing projects ongoing every year. I'm not familiar with the requests from your area, but I can assure you that we often do it at the request of the community, or we do it if there's growth that we need to deal with or changing demographics, changes in the communities—hundreds of communities.

It's not an easy change. It takes a lot of diligence and a lot of work with those who live in the community and with the cities as well.

I'd be happy to get more information—

[The Chair, Conservative, Kelly McCauley]

Thank you very much. I'm afraid that is our time.

[Manon Fortin]

—and to provide a clear answer on your area specifically.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mr. Kusmierczyk.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you so much for being here today at OGGO. Thank you very much for bringing your insights to the work of this committee.

I want to start off by saying thank you. This is the first time I have had a chance to say thank you for the stamp that was introduced back in January, for Black History Month, of Mary Ann Shadd, who is a local icon in the Windsor-Essex and Chatham-Kent area. Mary Ann Shadd was an abolitionist. She was the first woman and the first Black woman in Canada to publish a newspaper, The Provincial Freeman. I just want to say thank you for that wonderful initiative.

I'm just curious. What type of response have you received on that?

[Doug Ettinger]

Well, thank you for raising that. I appreciate it.

One of the really enjoyable parts of my job—and our job—is to tell the stories of Canadians, a lot of unknown and Canadian heroes that we don't know about.

That stamp went over very well as part of our annual focus on Black History Month. There are so many great stories there.

We really do a good job on those, and we really enjoy putting those stories out there and getting the families involved in the communities. It's great for Canada. If you've never been to a stamp launch, you should come. They're quite emotional and quite positive.

Thank you for the comments.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

That's wonderful.

Mr. Ettinger, you mentioned the word “heroes”.

I look at the 500 postal workers in Windsor as heroes. They're amazing. Especially during the pandemic, they answered the bell in a huge way. They continue to serve our community with distinction.

I'll just highlight that, two years ago, a former postal worker, Mr. Phil Lyons, received a prestigious award in our community, the Charles E. Brooks Labour Community Service Award, for being a community leader in Windsor-Essex, serving the community.

They are heroes. They not only carry and deliver the mail, as well as support our community, homeowners, seniors and others, but also make our communities better. They give back to our communities.

In budget 2024, the federal government affirmed that Canada Post will continue to be a service-first organization.

What does service-first mean to Canada Post?

[Doug Ettinger]

By the way, before I answer that directly, our employees are absolutely amazing. They are the ambassadors of our brand. They are everywhere, every day. We get tremendous positive feedback. Of course, not all of them are perfect, but they are pretty darn close to it, and we really value what they bring to the table. Through COVID, they were amazing. Just to remind everyone, they were on the front lines all through that. They never wavered from their responsibilities out there, and it was amazing to watch.

Service is priority numbers one through 10 for us. It is everything to us. It's in law, it's in our mandate, it's in our blood and it's in our purpose, which is “a stronger Canada—delivered”.

One of our recent investments through which we have tried to control things that are really important to us is a brand new facility we were pleased to open last year in Scarborough. The Albert Jackson Processing Centre, which was named after Canada's first Black letter carrier in the late 1800s, was a huge project led very well, I might say, by Manon Fortin.

That is the hub of our e-commerce model across Canada. It is an amazing facility, and our service numbers have shot up since then. The transition and stabilization have been incredible. Our on-time service performance numbers are the best we have ever seen in our history, and we're going for more. Manon has that as one of her goals for the next year. We are getting to a best-in-class level of service, and it's everything. That's what we're here for not only in urban areas but also, as we are discussing here, in rural and remote areas, where it is even more important to those folks. I grew up in a rural area and I have lived in rural areas, so I know how important the post offices are, and we're all over that.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Mr. Ettinger, that is a great response. I definitely agree with what you have stated.

What are some ways that Canada Post measures service?

[Doug Ettinger]

We have more KPIs than you can well imagine. It's hard sometimes to keep track of them all, but service is number one, along with safety. Manon and her team have dashboards that are all pretty much real-time numbers. We will get the numbers from the day before, the end of the day and the last week, so we measure on-time performance based on when the product was ordered versus when it was delivered. It's a percentage out of 100, so if you're getting to 96%, 97% or 98% delivered on time, you're in the right range. Of course, we always want to improve, but our goal is to be in that range, and it makes a big difference to both our major customers and our consumers. Probably the single most important thing we can do is to get better service numbers, so we spend a lot of time doing things to enhance those numbers.

[The Chair, Conservative, Kelly McCauley]

Thanks. That is our time.

I appreciate Mr. Kusmierczyk's bringing up the point about stamps. John Ware is certainly one of the greatest and coolest Canadians ever from Alberta, so I appreciate that. I look forward to the OGGO chair stamp series as well one day—