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Canada Post's Stamp price at $1-plus-taxes, a 35% increase

How many times last year did you send a letter using standard mail delivery?  If you are like me, you can probably count them on the fingers of one hand.  Once in a while, there are cases where it is still necessary to send something through snail mail.  This morning was such a moment so I went to my local Canada Post's postal outlet.

To my surprise, the Canada Post's clerk (which should really offer a warmer service given her bullet-proof job conditions) said the stamp price is now $1.  Add to this the sale taxes of course.  So here we are, to send a letter, it now costs about half the price of a subway ticket.  Oh, and this is not even considering the fact that the recipient's address is about just 10km to my address.  When I asked about priority mail, the cost jumps well over $10.

It seems to me that the time when stamps cost 45 cents were just a few years back.  Still about a month ago at the end of February 2014, I shipped a letter for 63 cents.  How many companies increase their prices at such gigantic jumps?  As stated in the article "Canada Post sales are tanking. What to do? Raise prices, of course" from William Watson, this represents a 35% increase.

The clerk told me that there is a "penalty" to buy just one stamp (side note: who in his right mind would ever think of using the word penalty as a marketing lingo).  The clerk added that I could save if I buy a roll of 10 stamps, which in that case, a stamp cost 85 cents.  On the downside, these are not permanent stamps, which means that with each mailing cost increase, those stamps will not be enough to send mail, hence requiring to buy extra stamps to cover the difference.  To send a few envelopes a year, this is not an interesting alternative.

Okay fine, they win.  I pay the $1.  But what about those that rely heavily on sending mail?  Normally with a cost increase, you get better services.  But on the contrary, Canada Post is cutting everywhere, removing the permanent stamps, ending door-to-door residential mail delivery in urban areas, reducing the overall service offered to customers by cutting 8000 jobs.

One thing is for sure, this appears to be a badly managed business.  If this was a publicly traded company on the stock market, its shares would have plunged way down.  Just like other government entity, it seems like the whole ship is sinking and everyone is just looking with the eyes wide open, doing nothing.  Nobody is accountable for sinking the boat, and surely not its management team.  After all, they are doing their best in the current changing market, while receiving salaries of $500,000 yearly plus benefits.

I would imagine that UPS and Fedex have submarines, while Canada Post is still in a steamer boat.  There is no excuse for losing so much money of Canadian's tax payers, when considering Canada Post was profitable a few years back.  While Canada Post is in red and there is talk of shutting of post offices, UPS and Fedex stocks have been going up year after year.  So much for the "it's the Internet's fault" excuse.

What is going on there?  If we do a quick 101 analysis, here are two things we can assume:

Point 1) Employees salary and conditions

Canada Post has one of the best paid public sector employees in Canada.  And don't take my word for granted: check their site's About Us page.  It self-proclaims "Canada's Top 100 Employer".  The company is on the verge of bankruptcy and employees still get the best benefits around.  Another search gave me some average salaries: letter carrier - $24 hourly, supervisor - $59,000 yearly, manager - $84,000 years.  Add to this the benefits like life-time job guarantee and unlimited paid sick leave, it's easy to see that something's wrong.

Another thing – it is well known that Canada Post's sick leave is among the worst managed and overly abused by employees.  Although there are no official documents, it costs about $300 million annually.

Point 2) Direction's vision

Clearly, we should call this the "lack of vision".  The board of directors seem short sighted and relies on solutions such as increase 35% the prices of stamps – on March 31st (as announcing this on April 1st would not sound serious).

The main issue is that the management team is not accountable for its decisions.  It uses public sector's money to fund their projects.  It's easy not to take this seriously if you can make mistake and still do it again year after year, without having any consequences.

I dream of a day where decision makers in the public sector will be accountable for the mistakes they do.  Failed to reach the target this year?  No bonus.  Better yet, do like the president of Nintendo.  His company didn't do as much profit as expected, so he cut his salary in half for a few months.  This is called preaching by the example.

To conclude, I would say that Canada Post is just another relic of the past that is no longer efficient in today's economy.  It's time a new leadership emerges to save this boat.  It is probably its last chance before we turn over to UPS or Fedex to send our envelope each year.


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