When Neil Pitman was trying to buy a new piece for his pressure cooker, he couldn’t believe the price difference between getting it shipped from the United States to his home in Sherbrooke, Que., compared to the cost of it coming from China.
The part would have cost him less than $1 to ship from China. But if he had ordered it from the U.S., it would have cost $22.99 to ship.
“I buy stuff off of eBay reasonably often, and I’m always surprised how much it costs to ship things from the U.S. as compared to from China,” said Pitman.
“It costs almost nothing to ship from China. And I’d like to buy American or Canadian. But even from the next province, it costs way more.”
Serasu Duran, a University of Calgary assistant professor of operations and supply chain management in the Haskayne School of Business, says it can cost about $5 or $6 per kilogram to ship a package from China to Canada.
“Which is quite cheap,” said Duran.
According to Canada Post’s shipping rate calculator, it can cost about $24 to send a one-kilogram package between provinces. And it would cost $28.50 to send a one-kilogram package from Canada to China, depending on its size.
The reason for that dates all the way back to 1874 and an international agency called the Universal Postal Union.
The history of post
It used to be quite difficult to send a letter from one country to another, according to Paulus Schoorl, program manager and policy and regulatory adviser for the Universal Postal Union in Bern, Switzerland.
If you sent a letter through multiple countries, you’d have to pay big bucks, he said. Each time mail crossed a border, it would incur an additional cost for the sender.
“It was awfully complex and difficult to send a letter from one country to another country, actually, sometimes across different jurisdictions or administrative areas,” said Schoorl.
China found itself with a major competitive advantage as e-commerce took off in the 2010s because of its cheap shipping rates. (Chinatopix/The Associated Press)
That led to representatives meeting in Bern, Switzerland, in 1874 and signing the Treaty of Bern, leading to the creation of the Universal Postal Union. It was an agreement that countries would carry other countries’ letters and small parcels for free.
“At that point, it was decided that all the [postal] services are universal service,” said Schoorl.
The idea was it would all balance out, with each country helping the other.
An imbalance
After 100 years, there was a change.
Schoorl says that Italy felt there was an imbalance. Italian postal carriers were delivering more international mail, as people there were ordering heavy magazines. Meanwhile, the country wasn’t sending out nearly as much mail as it was receiving.
In the 1960s, countries that were a part of the Universal Postal Union came to a new agreement. If a country was receiving more international mail than it was sending, it would be paid for the difference.
At the time, that was one half of a gold franc, a currency formerly used by international organizations, per kilogram of international mail. But not all countries could afford it.
During Donald Trump’s time as U.S. president in 2018, he threatened to pull the the country out of the Universal Postal Union. (James Lawler Duggan/Reuters)
The Universal Postal Union set up a fee so richer countries would pay more to have their international mail delivered than countries with developing economies.
“The central idea is that any citizen or business should be able to send mail packages through the Global Postal Network to any destination,” said Schoorl.
At the time, China was considered a country with a developing economy, meaning the country would be changed less for international mail than other countries. And that went unchanged for decades.
Where we are now
As e-commerce took off in the 2010s, China found itself with a major competitive advantage. It could ship to North America at a cheap rate. Canada Post and the U.S. Postal Service were delivering packages and not being compensated very well, says Schoorl.
In 2018, U.S. President Donald Trump pushed back on the rates and threatened to pull the country out of the Universal Postal Union.
The United States and other countries, including Canada, were able to negotiate a new deal withing the Universal Postal Union.
According to Mindaugus Cerpikin, an economist who studies the postal system in Copenhagen, the U.S. was able to land the biggest concessions. Canada was able to increase its rates over time, but Cerpikin says there is still a big gap.
“The U.S. was allowed to raise its fees and they were allowed to do it faster than other industrialized countries.”
Canada and other countries can raise their fees about 16 per cent annually, Cerpikin said.
“While 16 per cent may sound like a lot, one must consider that some countries like Canada need between [a] 200 to 400 per cent increase to close the gap between domestic rates and international rates.”
According to Canada Post’s shipping rate calculator, it can cost about $24 to send a one-kilogram package between provinces, depending on its size and where you want to send it. (Jason Viau/CBC)
The CBC reached out to Canada Post about the cost of shipping in Canada. It declined an interview, but sent an emailed response.
“Parcel rates are non-regulated and fully competitive within the industry,” spokesperson Lisa Liu said.
“Canada Post determines shipping rates based on several factors, including the origin and destination, which also consider population densities. The parcel weight and size, costs of processing and transportation and delivery are factored into the rate.”
In the meantime, Pitman would like to support local and buy from sellers in North America. But as long as shipping costs are as high as they are, it’s hard for him to justify it.
“I would like to prefer Canadian and our American suppliers, but it really doesn’t make any sense.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
