Canada Post's board highlights the need for major changes to compete in the evolving parcel market
Canada Post's financial situation is unsustainable, according to the chair of the organization's board, André Hudon, who spoke at the annual general meeting, as reported by BNN Bloomberg.
Hudon emphasized that Canada Post is at a “critical juncture” and that “significant change is urgently needed” to preserve its delivery network, which is the only one designed to serve all Canadians.
The COVID-19 pandemic led to a surge in online shopping, reshaping the parcel delivery market. Hudon noted that Canada Post is now competing with “high-tech, low-cost operators who are rapidly and relentlessly evolving.”
In response, the organization has paused some investments to focus on core priorities and has reduced costs across all levels.
To stay competitive in the rapidly growing e-commerce market, which is projected to double in the next decade, Canada Post has been working to introduce new services. However, the organization faces significant challenges.
President and CEO Doug Ettinger highlighted that letter mail, once Canada Post's primary revenue source, has declined drastically over nearly two decades, dropping from 5.5 billion letters annually to about two billion.
Ettinger explained that while Canada Post shifted its focus over a decade ago to meet the rising demand for parcel delivery, its market share in this area has been cut in half since 2019.
The Crown corporation struggles to compete in a fast-paced market with an “operating and delivery model built for an older era.” One disadvantage is that Canada Post is the only competitor in the parcel delivery sector that does not offer weekend delivery.
To address these issues, Ettinger stated that Canada Post needs more flexibility in its operations, investments, and regulatory framework. The organization's financial challenges were underscored by its recent financial reports.
In August, Canada Post reported a second-quarter profit of $46m before tax, thanks to a one-time sale of subsidiaries that offset an operational loss of $269m. This compares to a $76m loss before tax in the first quarter of the year.
Earlier this year, Canada Post and Purolator Holdings Inc. completed the divestiture of their shares in subsidiaries Sci Group Inc. and Innovapost Inc., following an announcement in January.
