March 29, 2007

(Letter sent to editor of the National Post)

Dear Editor:

I agree completely with Mr. Jordan Banks, Country Manager, eBay Canada, (eBay's plan to invigorate online Canada, National Post, March 28, 2007, pg. 19) in his opinion that government should help Canadian business to compete and to compete internationally. Certainly Canada Post helps Canadian business to compete, particularly with regard to the eCommerce market. However I cannot agree with Mr. Bank's assessment that Canada Post has "shockingly high postal rates and shipping fees."

The Canadian parcel delivery market is in fact one of the most competitive in the world, and Canada Post fights for share against large and efficient multinationals such as UPS, FedEx, and DHL, as well as thousands of smaller regional and local players. As a result Canadians have many practical shipping choices for different levels of service and price from competitors. We are pleased so many choose Canada Post.

eBayers do complain that they cannot compete with United States Postal Service (USPS) rates, as they compete with other US sellers in a continental marketplace dominated by US buyers. This false logic compares US domestic rates with Canadian cross-border rates which are naturally higher. Postal administrations and private couriers alike structure their processing and delivery networks on a national footprint. Crossing from one network to another duplicates costs, while customs clearance adds more still. It is simply unrealistic to expect that a Canadian-based eBayer selling to a Californian, and therefore obliged to pay international shipping rates for fulfillment, would be on equal footing with an American eBayer offering a competing item and could fulfill using a domestic US service. It is not uncommon to see prices for cross-border delivery, from any of the couriers serving the Canadian market, that are double or triple the price for similar service within Canada, or for domestic service within the US.

Canada Post has a statutory mandate to operate on a financially self-sustaining basis and is prohibited by law from cross-subsidizing its parcel business with revenues from lettermail. Our parcel services are provided on a purely competitive basis and are priced accordingly.

Within this competitive context we have annual price increases, as do our competitors, necessary to cover rising costs. Mr. Banks is wrong to say that our prices have doubled on average over the last four years. Since his reference point is the US market, it is surprising that Mr. Banks did not mention the impact of the Canadian dollar exchange rate over this period, which clearly would have had a much greater impact on ecommerce and eBay Canada sales volumes in to the U.S.

Canada Post has been actively encouraging the growth of ecommerce in Canada. Canada Post engaged in a strategic partnership with eBay in order to integrate shipping within the eBay / PayPal online marketplace. Not only does this afford eBay sellers and buyers significant convenience and time savings, it also provides eBayers with savings of 8-9% on their shipping costs.

Canada Post is also the delivery partner for many major Canadian online retailers which also have competitive options for delivery. In supporting eCommerce Canada Post has to prove itself not just on price, but on the ability to integrate, innovate and delivery reliably.

Louis O'Brien
President, Parcels Division
Canada Post Corporation