Government Operations Committee on Feb. 11th, 2022

[The Chair (Mr. Robert Kitchen (Souris—Moose Mountain, CPC)), Conservative, Robert Gordon Kitchen]

It's one o'clock, so we're going to be on time. This is a Friday, so we want to get moving as quick as we can.

Welcome, everybody, to meeting number five of the House of Commons Standing Committee on Government Operations and Estimates. Today we will be receiving a briefing from representatives of Canada Post Corporation.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Regarding the speaking list, the committee clerk and I will do our best to maintain a consolidated order of speaking for all members, whether participating virtually or in person.

I'd like to take this opportunity to remind all participants at this meeting that screenshots or taking photos of your screen is not permitted.

Given the ongoing pandemic situation and in light of the recommendations from public health authorities as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, the following is recommended for all those attending the meeting in person.

Anyone with symptoms should participate by Zoom and not attend the meeting in person. Everyone must maintain two-metre physical distancing, whether seated or standing. Everyone must wear a non-medical mask when circulating in the room. It is recommended in the strongest possible terms that members wear their masks at all times, including when seated. Non-medical masks, which provide better clarity over cloth masks, are available in the room.

Everyone present must maintain proper hand hygiene by using the hand sanitizer at the room entrance. Committee rooms are cleaned before and after each meeting. To maintain this, everyone is encouraged to clean the surfaces, such as the desk, chair and microphone, with the provided disinfectant wipes when vacating or taking a seat.

As the chair, I will be enforcing these measures for the duration of the meeting. I thank members in advance for their co-operation.

Before we start, I would like to remind members that we had to cut short the meeting on Tuesday, February 8 due to the sound issues that interfered with the interpretation. Regrettably, we were able to hear from the procurement ombudsman and his colleagues for only one hour. I'm happy to inform members that the procurement ombudsman has agreed to appear before the committee on Friday, February 18, 2022, from 1 p.m. until 2 p.m. in order to continue answering members' questions.

During the second hour of that meeting on February 18, the committee will meet in camera to discuss the work plans for the committee's study on the air defence procurement projects and its study on the national shipbuilding strategy.

With that said, I will now invite the representatives of Canada Post Corporation to make their opening statements.

Madam Fortin, you have the floor.

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

Thank you to the chair and to committee members for inviting us to join you today to talk about service.

My name is Manon Fortin. I am the chief operating officer at Canada Post. I am joined by my colleague, Serge Pitre, vice-president of business development, who works closely with many of the companies we work with and support.

Together we hope to answer your questions regarding service from an operational and customer perspective.

First, I would like to share some important context that will be helpful for our discussion.

At Canada Post, we understand the important role we play in the lives of Canadians. We proudly serve all corners of the country, the urban centres, the rural towns, remote communities, and the far north.

We’re the only delivery organization with the network, and the commitment, to serve all Canadians. We serve business of all sizes, helping to deliver their items or reach new customers.

We support small businesses, knowing they rely on us. When we deliver, we are not just representing Canada Post, we are an extension of their customer experience. We do so with an unrivalled cross-Canada network of plants, depots, post offices and one of the country’s largest fleets. Above all, it’s powered by our incredible people. More than 55,000 of them across the country are part of the communities they serve, and do an incredible job.

The needs of Canadians have continued to change over the years, and Canada Post has always adapted.

By serving all Canadians, working with countless businesses and delivering a significant portion of the country's parcels every single day, Canada Post has a front-row seat to the changing customer landscape. In the last two years, we've seen a rapid and unprecedented change in the needs of Canadians.

Ask yourself whether you or members of your family have been doing more online shopping during the pandemic?

If the answer is yes, then you are among the vast majority of Canadians. This is not a short-term phenomenon; it is a dramatic and lasting shift in consumer behaviours. The demand for delivery, fuelled by parcels and online shopping, has jumped forward by several years.

It's not just impacting Canada Post and those in the delivery business. It's forcing small and medium-sized businesses to rapidly adapt their business models.

Demand for rural parcel delivery is outpacing demand in urban. In the last two years we’ve seen rural parcel volumes grow by 48%, compared to 13% in urban.

The fact is, throughout the pandemic, Canadians have turned to Canada Post to provide an essential service they could trust with their growing need for delivery.

We understand the important role we play in connecting all Canadians. While we were doing everything to maintain service and keep our people safe the last two years, we were also investing significantly and building for the future.

Our goal is to provide a service all Canadians, including businesses, can count on.

Just as we have been there for Canadians through the pandemic, we know a much bigger role lies ahead: helping the country to build back stronger as it finally puts the pandemic in the rear-view mirror. We are therefore moving quickly and investing significantly. We are investing $4 billion over five years to build much-needed capacity, improve service, modernize our network and improve our environmental performance.

Let me provide a few examples.

It starts with building capacity in our network. It wasn't long ago that delivering a million parcels in a single day was a major milestone that happened only close to Christmas. It's now a typical day. We've more than doubled one million many times.

To deliver without delay, we needed to expand our capacity to process and sort throughout our network. That's what we're doing. Many of the country's parcels enter our network in the greater Toronto area, home to our largest parcel processing plant, Gateway in Mississauga.

We are therefore building our first new plant in years to augment capacity in the Toronto area, to ease the load on Gateway and improve service across the country. Construction is well under way, with plans to open early next year. This new plant will sort more than one million packages a day at full capacity. That is 50% more than what we have today in Toronto. Covering an area roughly equal to six football fields, it will also be a net-zero carbon building.

The new plant is part of our overall plan to boost capacity and improve service across our national network.

Montreal is also another key national hub for parcels, and we expect continued growth at our Leo Blanchette plant. A new packet sorter and other upgrades to double capacity and improve tracking for customers went live late last year.

Across the country, we’ve invested in our Moncton plant to make it an Atlantic Parcel Hub. We’ve invested in a new package sorter in Kitchener to respond to the rapidly growing population in Southwestern Ontario. We’ve also expanded delivery facilities in Calgary and built a new one in Regina near the airport.

We’re also investing in our rural delivery network where growth has outpaced our facilities. For example, we invested close to $1 million to double the post office size in Saint-Lin-Laurentides to reduce congestion in that facility and neighbouring facilities in Sainte-Sophie and Sainte-Anne–des-Plaines.

We’ve also kicked off new projects at facilities in different regions across Canada to expand capacity and improve service to Canadians.

I hope to be able to share more details about our comprehensive plan to serve the changing needs of Canadians when we get to your questions.

For now, let me reassure you that we get it. While we gear up to respond to this rapid increase in demand for parcel delivery in all parts of the country, we know our service means so much more than that.

Canadians expect us to reach across this vast country every day to serve every Canadian and treat every delivery and every customer with care and respect. We understand the responsibility that comes with that, and our plans reflect our commitment.

We're enhancing our retail post office services and offering new services. We're piloting a new community hub model in two rural communities to offer a wide range of services that are important to the people who live there. We plan to learn from these hubs to further improve our post office network.

We've implemented a strategy to improve mail service to underserved indigenous, northern and rural communities. We are working closely with several communities to improve service. We will continue this work, understanding our vital role in connecting these communities with the country.

We're helping small business navigate the changing demands of customers by sharing best practices, customer insights and discount programs. Above all, we're providing a service they can count on and the capacity to ensure they don't get squeezed out by large retailers.

We’re working hard to keep our people safe and improve relations with our bargaining agents. Our safety record continues to improve. We also reached new agreements with all our bargaining agents before they expired —giving our employees and customers much-needed certainty.

Throughout it all, we have continued to respond to the ongoing challenges of the pandemic. We’ve followed the guidance of the Public Health Agency of Canada and worked closely with our union colleagues to keep our people safe. We’re also making the environment a priority like never before in our long and storied history, while showing leadership on key social issues.

There is only one organization built to serve all 16.5million addresses across this vast country and connect Canadians like no other.

There is only one organization that would drive the roughly 473,000 kilometres a day it takes to reach every rural address. It's Canada Post.

We are proud to serve all Canadians and respond to their changing needs. We take our responsibility to this country very seriously. We are not sitting still. We are moving forward with a plan to build capacity, improve service and support small businesses.

At the same time, we're investing in our incredible people and in protecting the environment of this country we so proudly serve.

Thank you.

We look forward to your discussion.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much, Madam Fortin.

We will now go to our first round of questions. It's six minutes per questioner. The first will be Mr. Paul-Hus.

Mr. Paul-Hus, you have the floor.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Good afternoon, Ms. Fortin and Mr. Pitre.

First of all, Ms. Fortin, your testimony gives us a clear indication of the efforts you want to make. However, the problem has remained intact and that's why we're here today. We're wondering about the losses that Canada Post reports quarter after quarter, especially in the third quarter of 2021.

I'm going to ask you a question that stems from a request Prime Minister Trudeau made to the Minister of Public Services and Procurement, Ms. Tassi. In the latter's mandate letter, he asks her in particular to "[e]nsure that Canada Post provides the high-quality service that Canadians expect at a reasonable price and better reaches Canadians in rural and remote areas."

Is it currently possible to maintain a reasonable price and provide high quality service to Canadians given the results observed from quarter to quarter?

[Manon Fortin]

Thank you for your question.

Right off the top, I'd say yes. However, certain pieces will have to be put in place.

The needs of Canadians and Canadian businesses have changed during the pandemic. We know we're the only delivery business that can reach 16.5 million addresses. We also know that we're an essential partner and a proud partner of small and medium-sized businesses. We also know we're the preferred delivery business of most Canadians.

Canadians increased their online shopping by 48% during the pandemic. People who shop online place an average of 27 orders a year, 65% more than in 2019.

As I said in my remarks, that activity has resulted in exponential growth of 48% in the rural sector and 13% in urban.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I apologize for interrupting, but my speaking time is short.

[Manon Fortin]

That's fine.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you for your answer.

If I'm not mistaken, in the Canada Post group, the Purolator, parcels and online shopping segment is profitable for the company, whereas conventional business, letters and mail, for example, is operating more at a loss.

Is that correct?.

[Manon Fortin]

There are two separate businesses.

The results show that we posted losses of $264 million in the third quarter and $492 million for the full year.

Looking at revenue for the same period, we had a $500 million gain over last year. What had an impact on our profitability was the fact that rising costs exceeded revenue growth.

We're focusing on improving our service, ensuring our profitability and sticking to our mandate. We're hugely focused on investing so we can provide the best possible service to all Canadians.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I apologize once again for interrupting you, but I have to pick up the pace.

Earlier you discussed the relative increase in rural parcel delivery. I think that can be explained by the fact that there is no delivery competition in rural areas. The private sector competes with Canada Post in cities like Montreal, Quebec City and Toronto. It's often the private companies that deliver online shopping parcels there. That's especially true in Quebec City.

Why isn't Canada Post the main service provider?

[Manon Fortin]

We have very large market share in urban and rural areas. Last year, we delivered more than 340 million parcels.

What gives us an edge and makes us very proud is that we have an unparalleled parcel processing and delivery network. We're established in every community.

As I said, the number of parcels for delivery has increased. If we want to stay competitive and provide quality service, we have to invest not only in major centres, but also in small communities across Canada.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

I'd like to ask you a final question, Ms. Fortin.

As we all know, the government has commissioned a survey. What do you think of the idea of cutting services? We want an excellent service, but it's possible it could be reduced to three days a week.

Please briefly explain to me what you think about that.

[Manon Fortin]

I'd like to note that we aren't the ones who conducted the survey.

We're focusing our efforts on our long-term mandate, which is to provide the best possible service to all Canadians and all Canadian businesses. So we try to meet needs, even though they're changing.

As I've said, we're focused on investing to meet capacity needs. We want to improve service in all communities.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Paul-Hus.

We'll now go to Mr. Bains, for six minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair, and thank you to our guests, our witnesses who are here today.

I'm coming to you from British Columbia, on the west coast, in Richmond. There has been significant investment there by YVR, with a large sorting and trucking station there.

There's another one in the neighbourhood in which I live, just moments away from my house. The Canadian Tire store has a Canada Post counter inside.

My question to you is more around some of the investments that are being made to support innovation and growth. Is this a model that's being used across Canada, having Canada Post counters and branches inside other retail outlets or big box stores? Can you tell me a little more about that?

[Manon Fortin]

We have a network of 6,000 post offices. Some of them are provided through host businesses, as you've just described, and some of them are provided through corporate locations, mostly in rural Canada. We have several locations in urban Canada, but mostly our corporate offices are outside of urban Canada. Our objective is to provide the best service possible to all Canadians and to small and medium-sized businesses. That model of having a wide network where customers and businesses can access our services is absolutely part of our operational network.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

It is an ongoing effort, then.

Will it grow? Can you give me some feedback? Do you have feedback from customers? Is that something that's a profitable side of Canada Post? What kind of feedback are you getting in order to continue to grow that model?

[Manon Fortin]

I don't have specifics on the financials or the strategy behind that model, but I can certainly follow up with the committee on that.

I would say that, as part of wanting to provide service to all Canadians, certainly our post office network is a key element. It's an access point that other delivery companies don't have, but we have it. We're proud of it, and it is a very important piece of our network.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

I'm going to switch it up a little here. I want to talk about efficiencies as well, sort of along the lines of how you can appeal to customers more.

I had the opportunity to see a little presentation some time ago, and I understand that three out of every five parcels being delivered is a Canada Post parcel. Are there efficiencies around increasing that? What's the competitiveness with others that are in the market? Moving forward, how can you continue to remain relevant?

[Manon Fortin]

Maybe I'll go back a little to what I said previously, but really, as Canadians' needs are changing, the best way for us to stay relevant and to continue to be financially self-sustainable is to keep step with those needs. As I said, we're the only delivery company that goes to those 16 million addresses and to all of those businesses and farms across the country. We are the preferred delivery company of most Canadians, and we are investing. Right now, our focus is to invest heavily to continue to provide the service all Canadians can count on.

I'll give you a few examples of how we are doing that. In Montreal, we invested $85 million to add a third sorter in that facility in order to be able to process that additional volume and give them the capacity to improve service and processing there. In Moncton, we expanded the plant and put in a sorter there as well, to better serve all of the Atlantic region. In Kitchener, we just recently installed a sorter, again, to improve service in southwest Ontario. We are building a second plant in Toronto to provide a million pieces of capacity per day. Again, I'll remind everybody that it will be a net-zero building, which is a true expression of our environmental ambition.

It doesn't stop in urban Canada; it goes all the way through the network. We have $336 million set aside for places outside of urban Canada, such as North Battleford, Val-d'Or, Charlottetown, Kamloops, Prince George, Vegreville, Torbay, Neguac and White City, from the small community and delivery needs to the biggest community.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Bains.

We'll now go to Ms. Vignola, for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Good afternoon, Ms. Fortin.

Thank you for being with us today. I have a lot of questions for you.

According to the committee's 2016 report, access to some post offices is a problem for seniors and persons with disabilities.

Canada Post recently published a promotional flyer advertising measures concerning seniors and persons with disabilities. That's nice, but the target dates are quite far in the future: 2030 or 2040. I don't have the exact date, but it's nevertheless far away, particularly since accessibility legislation has been in force in Quebec for a long time.

My colleague from Rimouski-Neigette—Témiscouata—Les Basques has been fighting for more than 18 months to make the Cabano post office, to cite a specific example, accessible for seniors. For 18 months he's been told that no electrician can be found to install a push-button switch to open the door, which would facilitate access for seniors and persons with disabilities. They've been waiting 18 for a push-button switch to be installed.

Apart from that promotional flyer, what specific measures does Canada Post intend to take soon to improve people's access to their post office?

[Manon Fortin]

First of all, it saddens me to hear what's happening in Cabano. However, I can tell you that we're focusing on the need to improve our network and to invest in it to expand its capacity, correct deficiencies and improve accessibility, as you said.

We have an accessibility strategy, supported by investments, to eliminate barriers such as those you just described at the Cabano post office. Every time we make renovations or build a new depot or postal station we make sure the new standards are met.

In the case of Cabano, I'm going to ask my team to follow up with you. That's really unacceptable. We will rectify the situation.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

What methods do you use to assess old buildings to ensure they're accessible?