Canada Post recorded a pre-tax loss of $227 million in the third quarter of 2022 as parcel volumes fell compared to a year earlier and economic uncertainty reduced business spending on marketing mail.
The decline in parcel volumes follows two years of unprecedented growth in online shopping in Canada. While online shopping activity is still above pre-pandemic levels, consumer demand has softened in 2022 due to the return of in-store shopping, the rising cost of living and economic uncertainty. Rapid ecommerce growth has also increased the level of competition for parcel delivery.
For the third quarter that ended October 1, 2022, the Canada Post segment’s loss improved from a loss before tax of $264 million in the same quarter of the prior year. Revenue was $8 million or 0.5 per cent higher compared to a year earlier. For the first three quarters of 2022, Canada Post has a loss before tax of $516 million, compared to a loss before tax of $492 million in the same period a year earlier. Revenue fell by $210 million, or 3.4 per cent, compared to the first three quarters of 2021.
The cost of operations declined in the third quarter (by $26 million or 1.4 per cent) and in the first three quarters of the year (by $187 million or 2.7 per cent) compared to the same periods in 2021. An increase in discount rates resulted in lower pension and post-employment benefits, while parcel-volume declines drove lower labour costs.
In the third quarter of 2022, revenue for the parcels increased by $22 million or 2.8 per cent as volumes declined by 12 million pieces or 16.2 per cent, compared to the same period in 2021. For the first three quarters of 2022, revenue declined by $150 million or 5.2 per cent and volumes fell by 62 million pieces or 22.8 per cent, compared to the same period of the prior year. Volumes in 2022 declined from higher-than-normal volumes in 2021, especially in the first half of the year, when many stores remained closed to in-person shopping. Economic uncertainty also reduced demand for parcel delivery services in the second and third quarters of 2022.
Revenue fell by $5 million or one per cent in the third quarter compared to the same period in 2021, as volumes fell by 28 million pieces or 4.9 per cent. For the first three quarters of 2022, revenue declined by $69 million or 3.1 per cent, and volumes fell by 152 million pieces or 7.5 per cent, compared to the same period in 2021. Census and federal election mailings had increased transaction mail volumes in 2021, affecting year-over-year comparisons.
For the third quarter, Direct Marketing revenue decreased by $11 million or 4.7 per cent, while volumes fell by 107 million pieces or 10.9 per cent, compared to the same quarter in 2021. For the first three quarters of 2022, revenue increased by $32 million or 5.3 per cent, and volumes increased by 99 million pieces or 4.1 per cent, compared to the same period in 2021. Economic uncertainty reduced business spending on marketing in the second and third quarters.