• on Mar 3rd, 2014 in Ideas Worth Exploring | 3 comments

    Canada Post shares a number of similarities with the U.S. Postal Service, including its founding by Benjamin Franklin in 1753 when both Canada and the 13 colonies were under British rule. Both posts are self-supporting, meaning they pay for their operations through the sale of postage and services. And Canada Post, like the Postal Service, has suffered volume losses the past few years.

    Here’s where things get different, though. Canada Post has adopted a radical plan to restore its financial health, featuring bold initiatives that might seem too politically difficult in the United States. Canada Post’s five-point plan is intended to streamline operations, cut costs, and return the corporation to fiscal self-sufficiency by 2019.

    The plan features:

    1. Ending to-the-door residential delivery over 5 years. Two-thirds of Canadian residents already are without to-the-door delivery, so, while it is a major change, perhaps it is not as disruptive as it would be in other countries.
    2. Upping the price of postage. Bought in bulk, stamps that now cost 63 cents (CAD) will be 83 cents. Bought singly, the same stamps will cost $1. The increase still needs approval from the regulator.
    3. Streamlining via franchise post offices. Franchise post offices are more convenient for customers and less costly to operate. There’s a moratorium, however, on closing existing rural post offices given their popularity among customers.
    4. Increasing efficiency. Consolidation and technology improvements, including faster sorting equipment and more fuel-efficient vehicles, should improve operations. No resulting changes are expected in the corporation’s fairly relaxed 2- to 4-day delivery standard for letter service, yet parcel delivery is expected to improve.
    5. Reducing labor costs. Along with the service cuts, Canada Post said it would eliminate 8,000 jobs, mostly through attrition.

    Canada’s plan has met with criticism from opposition political leaders, labor unions, and some citizens. But Canada Post defends the plan saying without major operational changes it will lose $1 billion a year starting in 2020. It also faces a $6.5 billion pension fund shortfall.

    What could the United States learn from the Canada Post plan? Are some of these initiatives worth trying in the United States? Or are they not the right approach for the U.S.? What cost-cutting and revenue-generating ideas should the Postal Service focus on? 

  • on Aug 13th, 2012 in Products & Services | 29 comments
    More than 40 million Americans change their address each year, which means the U.S. Postal Service forwards an awful lot of mail. In fiscal year 2010, it forwarded 1.2 billion pieces. Under the Postal Service’s regulations, customers who fill out a change of address form have their mail forwarded to their new address for 12 months after the move. Mail forwarding costs the Postal Service almost $300 million a year. The cost to return mail to sender is another $800 million. The cost of mail forwarding – and returning to sender and treating as waste -- is baked into the overall First Class Mail rates, so all customers effectively pay for this service whether they use it or not. Canada Post has taken a different approach to mail forwarding, charging recipients either an annual or semi-annual fee when they move. Residential customers pay $75 for 12 months of forwarding and business customers pay $235. These prices increase slightly if the person or business moves to another province. The Canada Post model extricates the costs from the overall First Class Mail rate and is structured so recipients pay for the service, but only if they use it. Some U.S. business customers have requested that the Postal Service explore new pricing and product options to reduce the costs of forwarding and returning mail to sender. Would a model similar to the Canada Post one work in the U.S. or would residential recipients, in particular, feel like they were being charged for a service they thought was free? Should the sender pay for forwarding instead of the recipients? What would happen if recipients or senders decided against paying for forwarding? Would total costs merely go up since return to sender mail costs more than twice as much as forwarding per piece? Are there other alternatives? Share your thoughts below.
  • on Jan 23rd, 2012 in Ideas Worth Exploring | 7 comments

    A leading book on business strategy and innovation claims, “through innovation, business organizations can change the world.”

    A 2010 study on global postal innovation by Capgemini states “there is a general tendency among all postal operators to diversify by investments outside their core business (mail, parcel),” especially into the logistics and financial services areas. Among European operators, Poste Italiane, Swiss Post, Deutsche Post DHL (Germany), and Austrian Post, in particular, have increased their share of non-core business.

    Poste Italiane introduced the Postepay prepaid card at the end of 2003. Over 5.6 million customers in Italy have used this reloadable card, which allows them to make purchases and withdraw cash from ATMs. There is a one-time fee of €5 ($6.44) for opening the account and adding funds to the card or withdrawing money costs €1 ($1.29) at an Italian Poste.

    A number of other posts have made their own innovative marks. Canada Post in partnership with BackCheck, now offers ID verification at their locations. Post Denmark, working with financial partners, signed almost 3.5 million users for its eBoks digital mail service, almost 2/3 of the population. Austrian Post operates a banking network called PSK BANK, which has trained financial advisors at every postal branch and offers services including:

    • Free bank accounts.
    • High-yield insurance products such as retirement planning products.
    • Eastern European stocks.

    Share your thoughts in the comment section below.

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