Canada Post and the Cost of Delivery

A serious discrepancy in Canada Post’s 2009 Annual Report on how much it costs to deliver to every point of call.

How can such a large corporation with two external auditors, the Auditor General of Canada and KPMG, make such a major perceived error?

As per requirement by the Canadian Postal Service Charter, Canada Post outlined in its annual report that it delivered to 14,874,358 points of call in that one year period. This is every home, apartment and lobby box, group or community mailbox, postal box, general delivery or rural mailbox combined. They have also provided a breakdown of how much it annually costs to deliver to each point of call:

  • $253.00: Door to door
  • $119.00: Apartment or Lobby box
  • $100.00: Group Mailbox, Community Mailbox, Kiosk
  • $63.00: Postal Box General Delivery, etc.
  • $168.00: Rural Mailbox

This averages out to $140.60 per point of call per year. Canada Post stated in its Annual Report that the average was $156.00. Why Canada Post’s average number is higher than the actual math is not known.

Another mathematical problem is the total yearly sum of all these points of call versus Canada Post’s yearly revenue. There is a non-described discrepancy between the two. The sum Canada Post claims to have cost them to deliver to every point of call over a one year period adds up to $2,314,034,142.00 – far short of the $5,840,000,000.00 that Canada Post claimed as the 2009 annual revenue for Canada Post only (not other parts of its ownership such as Purolator and other sub-companies).

This sum includes payments towards the pension plan shortfall according to the Annual Report (page 28). This suggests all expenses are included in this cost breakdown.

Why a difference of $3,525,965,858 billion dollars? If it cost Canada Post over 2.3 billion dollars to deliver the mail, and they have an annual revenue over 5.8 billion, where is the other 3.5 billion going to?

Could it be Canada Post made 3.5 billion dollars in profit? Probably not, other portions of the Annual Report demonstrate a break even or close to loss point.

Canada Post nowhere has given an answer to such a discrepancy.

The current numbers provided by Canada Post on the cost to each point of delivery are useless for any real calculations. It calls into question the rest of the Annual Report as well. Are the numbers in other parts of the document as poorly edited or oblique as this?

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4 Responses to Canada Post and the Cost of Delivery

  1. Pingback: The MIA 2010 Canada Post Annual Report | Canada's Postal Transformation Project

  2. Denis says:

    You used a simple average to arrive at the $140 figure per pint of delivery. That would only work if each type of point of call was equal in numbers. But, I would say its not. The lowest cost, to a box or post office GD is for sure the smallest for instance.

    If Canada Post provided a count by type of delivery, it would be fairly easy to calculate the “weighted” average. That is the proper average to use.

    Also, delivery is only one of the cost components, though it largest component of the CPC costs. Other significant and obvious ones would be the mail processing, transportation and overhead costs.

  3. Ole Juul says:

    I understand from my local MP that Canada Post is mandated to make a profit – and does. I personally think that is wrong for a public service which is supposed to aid the economy.

    • Canada Post being a “Public Service” is a big question being debated right now. They are not mandated to make a profit, but at the moment are being run in a profit enterprise model.

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