Is Canada Post following in the Footsteps of UPS?

A February 17, 2012 Toronto Star interview with Deepak Chopra, CEO of Canada Post, reveals insights into the future of Canada Post, and it is markedly different from the company’s past.

Deepak’s vision demonstrates a blueprint that can be found in a pattern already established by the multinational-logistics- and delivery company, the United Parcel Service (UPS). UPS has the largest worldwide package delivery network.

The Toronto Star states, “Chopra believes the company must focus on both physical and digital delivery, and that’s why he has split the business in two — putting new management on both sides.”

What does that mean? In the context of UPS, it describes financial success.

Thomas L. Friedman, author of the 2007 book, The World is Flat, describes exactly what UPS is doing:

“Eaten a Papa John’s pizza lately? If you see the branded Papa John’s supply truck go by, ask who’s dispatching the drivers and scheduling the pickups of supplies, like tomatoes, pizza sauce, and onions. Answer: UPS. UPS comes inside a lot of companies now and takes over their branded vehicles to assure on-time delivery, which in the case of Papa John’s includes getting the pizza dough from bakeries to outlets at exactly the right times each day. Tired of shopping for tennis shoes at the mall? Go online and order a pair of Nikes from its Web site, Nike.com. The order, though, is actually routed to UPS, and a UPS employee picks, inspects, packs, and delivers your shoes for Nike online from a warehouse in Kentucky managed by UPS. Ditto if you order some underwear from Jockey.com. UPS employees, who manage Jockey at a UPS warehouse, will actually fill the order, bag it, label it, and deliver it to you. Your HP printer breaks in Europe or Latin America? The filed service repairman who comes to your door to fix it works for UPS, which manages the replacement parts and repairs divisions for HP in those markets. Oder some tropical fish form Segrest Farms in Florida to be delivered to your door in Canada by UPS? UPS worked with the company to develop a special package for the fish so they would not be injured as they traveled through UPS’s sorting systems. The fish are even mildly sedated for safe travel (like kids on Dramamine). “We wanted them to have a pleasant ride,” said UPS spokesman Steve Holmes.”(1)

It clearly demonstrates a strong business model that Canada Post can follow.

UPS generates over $53 billion dollars annually compared to the Canada Post Group of Companies $7 billion.(2) Can Canada Post compete?

Canada Post does not have the financial resources, infrastructure, or access to capital to compete with UPS. Canada Post’s market is limited to only 33 million people, whereas UPS appeals to an international audience counting in the billions. UPS uses its own cash reserves for capital expenditures.(3) Canada Post is presently straddled with a serious debt problem.

Mr. Chopra failed to give any financial or specific details on how he can achieve such a framework for the future of Canada Post — a significant omission given the challenges confronting him.

(1)Thomas L. Friedman. The World is Flat. Vancouver. Douglas & McIntyre. 2007. Pg.168-169
(2)http://pressroom.ups.com/pressroom/staticfiles/pdf/fact_sheets/UPS_2011_AR_Final.pdf Pg. 1
(3)http://pressroom.ups.com/pressroom/staticfiles/pdf/fact_sheets/UPS_2011_AR_Final.pdf Pg. 43

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