Despite growing parcel volumes last year, Canada Post has recorded a pre-tax loss of C$748m (US$543m) for 2023 as a result of the post-pandemic surge in parcel delivery competition, the ongoing erosion of transaction mail, and continued growth in addresses and delivery costs.
According to the post, its parcel delivery market share has fallen from 62% pre-pandemic to 29% in 2023, while transaction mail volumes have reduced by 3.3 billion since 2006 to 2.2 billion letters in 2023.
Total revenue last year fell by C$240m (US$174m) compared to 2022 and all three lines of business – parcels, transaction mail and direct marketing – saw a drop. Meanwhile, the cost of operations in 2023 rose by C$11m (US$8m) compared to the previous year due to higher labor costs, non-capital investments and depreciation expenses. This was partly offset by lower employee benefit costs driven by an increase in discount rates, according to Canada Post.
Universal service hindrance
Under the Canada Post Corporation Act, the postal operator must serve all Canadians in a financially self-sustaining manner based on revenue generated by the sale of postal products and services, not taxpayer dollars.
However, this has been hindered by falling mail volumes – over the last 20 years, the amount of mail Canadians receive has declined by more than 50%, while the number of addresses has increased by more than three million, resulting in lower revenues and higher costs.
The growth in its parcel delivery business has not been enough for Canada Post to counter the decline in mail volumes and revenues and as competition in the sector increases, the post says it must make changes to “ensure the viability of the national postal service”.
Doug Ettinger, president and CEO, Canada Post, explained, “Canadians understand our business model must change. They can see it in their mailbox. An operating model designed to deliver nearly 5.5 billion letters in 2006 cannot be sustained on the 2.2 billion letters we delivered last year. This trend is not unique to Canada.
“Like other businesses, we need to adapt to what Canadians need, where they live, how they shop and use our services. Canada Post is committed to leading that change, building on the improvements we’ve made across the organization over the last few years. Canadians still value the importance of their national postal service, which is why we’re working in partnership with the Government of Canada to put it back on the path to long-term financial sustainability.”
Read more on Canada Post’s 2023 financial results here.