History of the Problem with Canada Post

In 2001 Canada Post approached us to say that they wanted to convert to a system based on a combination of weight and volume for parcel charges and, since they had no way of measuring volume, they wanted us to use a series of standard boxes of known volume. We pointed out that this would be inefficient for us since we had a number of products that had a large footprint but were not very high and we routinely cut down a larger box to accommodate the product. However, since it was not a large volume of boxes that would be reduced in size and since Canada Post was pressing for this new regime, we agreed to it. We converted our packaging to standard boxes, bar-coded to indicate volume. In our shipment manifest at the end of each day, Canada Post got a record of packages by volume and weight. In 2003 we noticed an unusually large number of up-charges on our bills but no credits. We asked Canada Post for their record justifying these up-charges. It was then we found out that shortly after implementation of standard size boxes, Canada Post had installed equipment that inaccurately measured the volume of packages and had been applying this new volumetric system to our packages and applying up-charges to a very large number but never a credit. We knew there were a number of boxes that had been reduced in size and that the bar code over-estimated their volume. At first Canada Post said it would be too much effort to get the records, then they said it would take six weeks, then after many months they finally said the records did not exist.

It was also at this time that we found they were not actually measuring volume; they were measuring the maximum dimension of packages in three axes. This meant that a box of triangular cross section would be charged at the same rate as a box of rectangular cross section of the same height, length, and width even though a triangular box has half the volume of the rectangular box of the same three dimensions. Similarly, any box that had slight swelling at the top (common to almost all shipped packages since there has to be some degree of internal compression in order to guarantee that products don’t shift around) would have the maximum point taken as the average height of the box, an exaggeration.

We knew that some of these up-charges were legitimate because we have some items, (like a 4 foot level) that are better shipped in a non-rectangular container, in this instance, in a tube. Since these represented only a very small percentage of parcels, Canada Post had agreed to calculating the volume of such parcels themselves. Our daily manifest did not indicate volume on these.

What Canada Post had done was of concern to us in four areas. The first concern was that Canada Post had not told us that we no longer needed to use specially bar-coded boxes because they were now using an automated form of volumetric measuring. Second, it concerned us that they never issued credits for packages smaller than their bar-coded size (e.g. any of the cut-down boxes) but only applied up-charges. The third concern was that they could not present all the records that justified the charges. At issue were about 60,000 up-charges that resulted in increased billing of $90,000. Finally, the inaccuracy of their system grossly over-estimated package volume.

None of our inquiries were answered quickly. When confronted with our concerns in November of 2003, the Canada Post representatives at the meeting said they would go away and get an answer for us. The various answers came out in bits and pieces until by April of the following year it was finally revealed that they had no records, their charge system had no audit trail and it was Canada Post policy to never credit customers if customers had overcharged themselves, even when Canada Post knew about the overcharge and could have issued a credit the same as they so willingly had issued 60,000 up-charges that were being contested. Over the ensuing months, there was much ducking and weaving on the part of Canada Post and then they finally offered to give us $90,000 covering a different period of time where we had not challenged their charges. We pointed out that we did not know what we were owed but we were quite certain it was not $90,000 since we knew that there were legitimate up-charges as well as some legitimate credits. Although the amount at issue was significant, it was more important to us to have a system that was both honest and fair in its application since we use some $7 million of Canada Post services per year.

Canada Post maintains that it was the policy of other people in the industry to never give a customer a credit if they had over charged themselves and further maintains that the system of measuring volume by taking maximum dimension on three axes was also an industry standard. In short, they were maintaining that they had to do what everybody else did in order to remain competitive; they did not seem to think a higher standard was indicated for a Crown Corporation.

At this point we had written to the President of Canada Post, the Chairman of Canada Post, the Minister responsible for Canada Post and the President of the Treasury Board (who had recently undertaken a review of Crown Corporations and their practices) and in every instance had either been told this was not something they were responsible for or that they would investigate and get back to us. None did. In at least one instance, not even our letter was acknowledged. By this time we were well into 2005 and we decided to ask Measurement Canada (who are responsible for enforcing the Weights and Measures Act) to render judgment on whether or not Canada Post was meeting the regulations under the Act. The inspector assigned to the case dealt with us in a very straightforward manner, saying that the Act required people who sold by volume or weight to maintain an audit trail and that the Act very specifically stated that it was an infraction to charge for more weight or volume than had been delivered. We had provided him with all of the background information and he went to Canada Post to inspect their equipment and system. A few days after his first visit to Canada Post he called to say that he had been taken off the case by the management of Measurement Canada and he did not know who would be dealing with it.

We found out it was a program officer (resident in British Columbia) it had been turned over to and he told us Measurement Canada was not “well placed” to deal with the service industry but that they had accepted the transportation industry’s methods of measuring volume because that reflected the available technology. We told him that there was technology available that could do more than measure the maximum height, width and length of an object but he said this was not available to the transportation industry in general. In any event, he said that Measurement Canada had accepted this standard of measurement so technology was no longer a concern. It was drawn to his attention that this was not reflected in either the Act or the regulations under the Act. He said that draft regulations had been prepared a number of years ago which reflected Measurement Canada’s acceptance of this standard. When it was again pointed out to him that such regulations had to be gazetted to be given the force of law he ignored it and said that people accepted them as the law if they understood the situation. There was a great deal of circular discussion which led nowhere. The complete correspondence can be seen on www.postalproblem.ca. Click on Measurement Canada.

In summary, we have nowhere to turn since we cannot get a response from Canada Post management other than acknowledgements received to date. The then President, the Chairman, and Minister responsible all essentially denied responsibility or promised to look into it and get back to us and never did. Most troubling of all is that Measurement Canada stonewalled us after pulling the inspector off the investigation. The Minister of Industry (responsible for Measurement Canada) was notified of our concerns in the summer; a reply came only in October. Since Canada Post is not one of the Crown Corporations audited by the Auditor General, the fact that they are apparently breaking the law by either refusing justification of their charges (and keeping no records so that they could provide evidence) is not of concern to senior management at either the official or political levels of Canada Post and appears not to be of concern to the Minister of Industry who is responsible for the administration of the Weights and Measures Act.

On top of all this, we frequently see Canada Post advertising their Borderfree program in print and on TV, specifically naming American competitors they are helping to enter the Canadian market, even to the extent of plastering the Canadian flag on the front and back of the American catalogs next to the Borderfree advertising. We thought there was not much more they could do to us but we were wrong. In addition, Canada Post still requires us to continue to state the weight of each parcel we ship even though they reweigh them at the same time as they do their approximate volumetric measurement. The only two reasons we could see for continuing to require this duplicate activity is that it allows them to prey on any errors we might make in their favour or their new equipment is inaccurate and they need a check weight.

Their practices are unethical and without a legal base in the Weights and Measures Act. They have been encouraged in all this by Measurement Canada, an organization that has leapt to their defence repeatedly, even in the face of clear evidence of unethical activity and the use of legally undefined units of measure.