The chair of Canada Post’s board issued a stark warning on Wednesday, describing the organization’s financial situation as “unsustainable” amid intensifying competition from e-commerce platforms and a significant drop in demand for traditional mail services.
During the company’s annual general meeting, board chair André Hudon highlighted the critical juncture at which Canada Post finds itself. “Significant change is urgently needed to preserve Canada Post’s delivery network, which is vital because it’s the only delivery network built to serve all Canadians,” Hudon stated.
The warnings from Hudon, along with other top executives, reflect years of financial struggles at the national mail carrier. Experts have raised concerns that Canada Post could face a fate similar to that of Blockbuster if it fails to adapt quickly to the changing landscape. As reported by Global News’ Sean Boynton, Hudon pointed to the surge in online shopping during the COVID-19 pandemic as a major factor reshaping the parcel delivery market. Canada Post is now competing against “high-tech, low-cost operators who are rapidly and relentlessly evolving,” he explained, noting that the financial impact on the company has been “enormous.”
“With every quarterly report, it becomes clearer that our financial situation is unsustainable,” Hudon emphasized.
In response to these challenges, the organization has paused certain investments to focus on core priorities and has implemented cost reductions across all levels. Canada Post’s latest annual report echoed these concerns, revealing “significant” annual losses since 2018. Last year’s loss, at $748 million, was the second-largest in the company’s history.
Hudon also mentioned ongoing efforts to introduce new services to enhance Canada Post’s competitiveness in the parcel delivery sector, especially as the e-commerce market is projected to double over the next decade.
In addition to the pressures from the parcel delivery market, Canada Post has experienced a dramatic decline in letter mail deliveries, which were once its primary source of revenue. Over the past two decades, the organization’s annual letter deliveries have plummeted from 5.5 billion to about two billion, according to president and CEO Doug Ettinger.
Despite shifting its focus more than a decade ago to meet the growing demand for parcel delivery, Ettinger acknowledged that Canada Post’s share of the parcel delivery market has been cut in half since 2019. “We are doing our very best to compete in this fast-paced parcel delivery market, but we’re doing so with an operating and delivery model built for an older era,” Ettinger said.
As reported in the Global article, Ettinger also noted that Canada Post is the only competitor in the market that does not offer weekend delivery, further complicating its ability to compete. He stressed that the company needs more flexibility in its operations, investments, and regulatory support to remain viable.
In August, Canada Post reported a second-quarter profit of $46 million before tax, largely due to a one-time sale of subsidiaries, which helped offset an operational loss of $269 million. This was an improvement over a loss of $76 million before tax in the first quarter of the year.
The 2023 annual report also revealed that Canada Post has been operating without a government-approved corporate plan since 2020, relying on outdated assumptions and projections. The company is still awaiting approval of a new corporate plan that would extend to 2028 and emphasizes the need to work with its shareholder to achieve financial self-sustainability.