Canada Post to spend $1.7B on modernization

Canada Post is planning to spend $1.7 billion to modernize its antiquated equipment as it anticipates riding a global wave of deregulation that has already struck many developed countries, particularly in Europe.

The expenditures to be carried out over five years would allow the Crown corporation to eliminate the “decrepit” equipment jokingly referred to as computorsaurs.

“The whole way in which we handle the mail is antiquated,” Canada Post CEO Moya Greene said in an interview Monday.

“We have equipment that most postal administrations haven’t used in 20 years.”

The new equipment, which has yet to be ordered, would help the mail carrier to adjust to the large number of employees who are expected to retire over the coming years, while honouring all its promises about job security.

It would also permit the replacement of some 7,000 trucks with more environmentally friendly vehicles.

Modernizing is a requirement for Canada Post as it positions itself for the market reality of new and greater competition, Greene said following a speech to the Canadian Club of Montreal.

Although she’s not asking the government to deregulate postal service in Canada, Greene said global trends suggest markets are becoming more liberalized with varying degrees of success.

Government officials couldn’t be reached for comment. But earlier this year, they denied any plans to privatize postal services.

Germany and Austria have done the best job, while Britain lags seriously behind.

The key is giving the postal service perhaps 10 years to adjust and the freedom to get rid of some services and charge more for others, Greene said.

As a service with the third-lowest residential postal rates in the developed world, Canada Post may need the ability to offer different types of rates, including fees based on distance and volume use, she said.

About 99 per cent of Canada Post’s $7.3 billion in annual revenues come from commercial services.

After years of disruptive labour disputes, Canada Post was created as a Crown corporation in 1981. It was given a monopoly to collect and deliver letters under 500 grams.

However, it has recently been challenged by “re-mailers” who illegally collect mail in Canada and ship it abroad into foreign postal systems.

As it does with parcels and direct marketing, Canada Post can compete in letter mail, Greene told the economic gathering.

“But we need to modernize and we need to receive the same freedom to build a successful business that the new players will have when they enter our market.”

With 74,000 staff, Canada Post is the country’s sixth largest employer. It delivers 40 million pieces of mail daily.