Canada Post sees $13M profit in 3rd quarter of 2014

http://www.cbc.ca/news/politics/canada-post-sees-13m-profit-in-3rd-quarter-of-2014-1.2850799

Canada Post is citing pensions, parcels and changes announced last year as reasons for both a third-quarter profit and expectations to end 2014 in the black.

The corporation said Wednesday it posted a pre-tax $13-million profit in 2014's third quarter, which is $142 million more than the same quarter a year ago, for a pre-tax total of $39 million in profits through the first nine months of this year.

It posted a pre-tax, $53 million profit in 2014's second quarter, the first profitable quarter since 2010.

• Canada Post makes a profit after hiking mail prices
• Canada Post to phase out urban home mail delivery
• Canada Post court challenge launched to save home mail delivery

While the amount of so-called "transaction" mail (which includes letters, bills and statements) continues to fall, Canada Post said increasing the price of sending these kinds of mail has played a big part in growing transaction mail revenue over the last year.

"Largely as a result of the Lettermail price adjustment put in place in the second quarter, revenue from Transaction Mail … rose by 13.7 per cent to $750 million in the third quarter compared to the same period in 2013," Canada Post said in the release.

"Revenue for the first three quarters rose by 6.5 per cent to approximately $2.4 billion compared to the same period last year."

Almost three million more parcels went through Canada Post in the 2014 third quarter than in the same 2013 quarter, leading an 8.2 per cent growth in parcel-related revenue to $337 million.

Overall, Canada Post said it has made more than a billion dollars more revenue from sending more than four million more parcels in the first three quarters of 2014 compared to 2013.

Canada Post also said "highly volatile" employee benefit costs went in its favour last quarter, as costs decreased by $48 million — a total of $161-million less in 2014 than the first three quarters of 2013.

It said "strong pension asset returns" last year and an increase in the discount rates used to calculate benefit plan costs this year are factors in those decreases.

Revenue from direct marketing mailouts dropped by $15 million in the third quarter this year compared to last, when it was $294 million.

Sixty-five million fewer pieces of direct marketing mail were sent out this third quarter compared to the last quarter.

800,000 homes switching to community mailbox

Canada Post is in the midst of a major restructuring announced in December 2013 that includes the end of door-to-door delivery in favour of community mailboxes and an increase in the cost of postage.

On Wednesday, the corporation said about 100,000 homes have been switched to community mailboxes, about 700,000 are in the process of doing so and another 200,000 or so will be notified next month.

It also said "consolidating processing operations" because of the steady decline in transaction mail volumes — 175 million fewer pieces of mail in the first three quarters of 2014 compared to the same time frame in 2013 — is leading to savings.

As part of those operations, mail is being moved from plants in cities such as Ottawa, Hamilton and London to Montreal and Toronto, as well as from Saint John to Halifax.

Canada Post said it spent $13 million less on labour in 2014's third quarter than in the same 2013 quarter, because of "streamlining and modernization."

The decline in mail volumes in the 2014 third quarter comes after a second quarter during which it slowed somewhat unexpectedly, which Canada Post said could have been related to mail from two provincial elections.

When announcing its new plans nearly a year ago, Canada Post said it would eliminate 6,000 to 8,000 positions between then and the end of 2018, but 15,000 employees were expected to leave the company or retire in those five years.

Union: profits show motivation behind cuts

The Canadian Union of Postal Workers is challenging the end of urban door-to-door mail delivery in Federal Court, saying it violates Section 15 of the Charter of Rights and Freedoms by taking away rights from people with disabilities, and that the move didn't get the parliamentary approval required.

It issued a news release Wednesday afternoon saying the profits prove Canada Post doesn't need to end door-to-door delivery.

"At this point, it's obvious that these cuts are based on attacking public services, rather than the facts," said union national president Denis Lemelin in the release.

"Our post office has been profitable for the vast majority of the last 20 years and continues to be profitable. We need to stay headed in the right direction, not cut back on a good service."

The union said the corporation had projected a loss of $274 million in 2014, so the profits show their forecasts can't be trusted.

Unions Fight Postal Service Plans To Shutter 82 Facilities, Lower Mail Standards

http://www.huffingtonpost.com/2014/11/12/postal-service-consolidation-plan_n_6147200.html

With the U.S. Postal Service planning to shut down 82 more plants starting in January, postal worker unions and allies in Congress are pushing for a late-game moratorium on closures they say will weaken the agency and further slow down the mail.

The scheduled shutdowns are part of a consolidation plan the agency put in place in 2011 to help staunch its red ink, much of it the result of pre-funding mandates instituted by Congress. The closures go hand-in-hand with the postal service's plan to save money by reducing the service standards for certain mail categories, a strategy that's divided stakeholders in the postal reform debate.

According to the postal service, the plant consolidations would most affect first-class mail. Personal letters, bills and greeting cards that normally reach their destination overnight would take two days after the closures. Priority mail and packages won't be impacted, the agency said.

The facility closures and lowered service standards, the unions argue, will ultimately hurt the agency rather than help it, leading to the proverbial "death spiral" as customers find the service slower and less reliable. The unions are gearing up for a round of protests on Friday, with nearly 150 demonstrations scheduled around the country.

The upcoming consolidations are the next battleground in a larger debate over how to make the postal service viable in the future. With the agency facing a possible bankruptcy, the postmaster general, Patrick Donahoe, advocated for a number of cuts and reductions that postal unions found counterproductive.

"The mail has already been slowed down. We're trying to keep it from being slowed down even more," said Mark Dimondstein, president of the American Postal Workers Union, which represents 200,000 postal workers and retirees. "Two days will become three days and four days. It will be a slowing down of the mail throughout the country."

The postal service has said that it is responding to falling mail volumes -- particularly first-class, which has dropped by 53 percent over the last decade. The closures, it maintains, are necessary for the agency to regain its financial footing.

"The fact is that the US Mail is changing. There are now fewer letters and considerably more packages and the network must reflect that," Sue Brennan, an agency spokeswoman, said in an email. "With major volume decreases in First-Class Mail, the Postal Service has significant excess capacity in its network and cannot sit idly by and do nothing. The Postal Service firmly believes that the operational changes being implemented are necessary."

The postal service closed 141 processing facilities between 2012 and 2013 in the first phase of its consolidation plan. The second phase, originally slated for early 2014, was pushed back to this coming January. According to Brennan, all the consolidations together are expected to save $2.1 billion annually.

The consolidation of plants means that some facilities will lose jobs, while others gain them. An analysis by the publication Government Executive found that the postal service's plan will result in a net loss of 7,320 jobs.

The agency has said it needs to implement such cuts in order to contend with a long-term decline in first-class mail volume, the rising cost of wages and benefits for its workforce, and the funding mandates placed upon it by Congress. In a public letter to customers earlier this year, the postal service said the plant consolidations "will establish the low-cost, technology-centric delivery platform necessary to serve the mailing and shipping industry for decades to come."

Indeed, the agency has lost billions of dollars in recent quarters, and first-class mail has fallen off significantly in the Internet era. But most of the agency's financial losses stem from a requirement passed by Congress in 2006 that the postal service prefund retiree health benefits to the tune of more than $5 billion per year. The postal service is an independent agency that's funded through postage fees rather than taxpayer dollars, but Congress still oversees the agency and would have to legislate any major overhaul.

With mail rebounding during the economic recovery and package delivery growing with e-commerce, the postal service actually turned an operating profit recently when the retiree health costs are set aside. Unions have held up those financial improvements as evidence that service cuts would be damaging.

"With the Postal Service operating at a profit -- about $1.3 billion so far this fiscal year -- degrading service by closing processing plants and slowing the mail makes absolutely no sense," Fredric Rolando, president of the National Association of Letter Carriers, told HuffPost through a spokesman. "It would hurt Americans and their businesses, eliminate overnight mail, cost jobs -- and it would be destructive for USPS as well, because it would drive away mail and revenue."

There are a couple of ways the unions may win a reprieve on the facility closures.

The first would be if Congress includes a delay in a spending bill passed in the lame-duck session. In August, 51 senators sent a letter to leaders of the appropriations committee, urging them to insert such a moratorium into either an omnibus spending bill or a shorter-term continuing resolution. "As the postal network has been weakened, service delivery has suffered," they wrote.

Lawmakers did not put a moratorium into the continuing resolution passed in September, though they'll have to pass another funding bill by the time the current one expires in early December.

A moratorium has the support of most Senate Democrats. But it doesn't have backing from Sen. Tom Carper (D-Del.), who chairs the Homeland Security and Governmental Affairs Committee, which oversees the postal service, and who is one of the most influential voices in the postal reform debate. A Carper spokeswoman told HuffPost that the senator would only support a delay in facility closures as part of a larger postal reform bill -- something that's all but certain not to pass Congress by January.

Without a moratorium from lawmakers, the other hope for the unions is that the postal service itself will decide to postpone the closures like it did last year.

"Congress is not the only way this can be done ... it's also in the hands of postal management," APWU's Dimondstein said. "There's nothing that says the postmaster general has to move forward with any of this."