Canada Post Faces $748 Million Loss in Past Year, Signals ‘Critical’ Financial Strain
On Friday, Canada Post issued a stark warning, stating that its financial outlook is dire enough to potentially deplete its operational funds within a year. This dire pronouncement followed the Crown corporation’s disclosure of yet another significant pre-tax loss, totaling $748 million in 2023, as revealed in its annual report released late Friday afternoon.
The report projects that without substantial revisions to its operational framework, Canada Post anticipates enduring even larger, unsustainable losses in the coming years. This revelation underscores a persistent trend, as the postal service has grappled with financial deficits since 2018. Over the span of six years, its cumulative losses have amounted to a staggering $3 billion.
“Even with Canada Post’s recently proposed stamp price increase, the Corporation projects that, without additional borrowing and refinancing, it will fall below its required operating and reserve cash requirements by early 2025,” the report says.
The corporation attributes its financial challenges to dwindling revenue from both letter mail and parcels, despite experiencing a surge in package volumes.
The decline in letter mail has been evident since its peak in 2006. In 2023, Canada Post delivered fewer than 2.2 billion letters, further illustrating this downward trend.
Canada Post highlighted the escalating expenses associated with mail and parcel delivery. The company attributed its challenges to post-pandemic competition from a growing number of privately owned delivery firms employing what it terms a “low-cost labor” model.
In efforts to tap into the e-commerce realm, Canada Post’s market share swiftly dwindled from 62 percent in 2019 to a mere 29 percent, indicating a significant decline.
The report acknowledges the long-standing decline in the corporation’s financial health, emphasizing that the current competitive environment has exacerbated these issues, pushing them to a critical juncture.
Furthermore, Canada Post noted the annual addition of approximately 200,000 new addresses in Canada, which further escalates delivery costs.
“These competitors grew rapidly, leaning on their low-cost-labour business models that rely on contracted drivers to provide lower prices, plus greater convenience with evening and weekend service,” the report said.
Earlier this year, the company initiated a transformation plan aimed at revitalizing the struggling national mail service, which included divesting its IT and logistics departments.
Additionally, Canada Post has made substantial investments in expanding its package delivery processing capacity, facility upgrades, and enhancing customer service.
“Canada Post is committed to leading that change, building on the improvements we’ve made across the organization over the last few years,” the company’s president Doug Ettinger said in a news release.
The Canadian Union of Postal Workers (CUPW), representing 60,000 employees, did not provide a response to CBC’s request for comment. Currently, CUPW and Canada Post are in negotiations for the next collective agreement, with workers seeking adjustments to keep pace with the cost of living.
