Canada Post Faces Financial Crisis: Urgent Reform Needed to Avoid Collapse
Since 2018, Canada Post has recorded significant losses, including a staggering $748 million loss last year, the second-largest in its history.
In a stark warning at Canada Post’s annual general meeting, André Hudon, Chair of the Board, declared the organization’s financial state “unsustainable” as it grapples with fierce competition from e-commerce giants and declining demand for traditional mail services.
“The board and senior management recognize that Canada Post is at a critical juncture,” Hudon emphasized, underscoring the need for immediate and substantial changes to preserve the vital delivery network that serves all Canadians.
Hudon’s comments reflect a broader crisis facing the national mail carrier, which, according to industry experts, risks becoming obsolete if it does not adapt swiftly. The surge in online shopping, catalyzed by the COVID-19 pandemic, has dramatically transformed the parcel delivery landscape, leaving Canada Post in a battle with “high-tech, low-cost operators who are rapidly and relentlessly evolving,” Hudon added.
The financial strain on Canada Post has been profound. Hudon noted that every quarterly report has highlighted an increasingly dire financial situation. The Crown corporation’s latest annual report reveals a troubling trend: since 2018, Canada Post has recorded significant losses, including a staggering $748 million loss last year, the second-largest in its history.
To address these challenges, Canada Post has implemented several measures. These include halting some investments to focus on core priorities and reducing costs across all levels of the organization. Despite these efforts, the company continues to struggle with a significant decline in letter mail deliveries, which historically served as its primary revenue source. Over the past two decades, letter mail volumes have plummeted from 5.5 billion to around two billion annually, as reported by President and CEO Doug Ettinger.
The company’s pivot to parcel delivery, initiated over a decade ago, has not yielded the desired results. Ettinger revealed that Canada Post’s market share in parcel delivery has halved since 2019, highlighting the challenges of competing in a market that has evolved rapidly. Adding to the difficulty, Canada Post remains the only major carrier that does not offer weekend delivery.
To remain competitive, Ettinger stressed the need for greater operational flexibility, enhanced investment strategies, and regulatory support. The company’s struggle is further complicated by the absence of a government-approved corporate plan since 2020, with the current plan containing outdated assumptions and projections. Canada Post is awaiting approval for a new plan, which is expected to guide the company towards financial self-sustainability by 2028.
In a rare piece of positive news, Canada Post reported a $46 million pre-tax profit for the second quarter, aided by the one-time sale of subsidiaries. This result contrasts with the $76 million loss reported in the first quarter of the year. However, with ongoing challenges and an evolving market, the road to recovery remains uncertain for Canada Post.