Canada Post at ‘critical juncture’ due to unsustainable finances, board chair says – National
The chair of Canada Post The board warned on Wednesday that the organisation’s financial situation was “unsustainable” as it struggles to compete with e-commerce platforms and faces falling demand.
“The board of directors and senior management recognize that Canada Post is at a critical juncture,” said André Hudon at the company’s annual general meeting.
“Significant changes are urgently needed to preserve Canada Post’s delivery network, which is essential because it is the only delivery network designed to serve all Canadians.”
The dire warnings from Hudon and other top executives come after years of struggles at the national postal carrier, which experts say could “follow the Blockbuster path“if he doesn’t change course soon.
Hudon said the rise of online shopping during the COVID-19 pandemic has reshaped the parcel delivery market and Canada Post is competing with “high-tech, low-cost operators that are moving quickly and relentlessly.”
The impact on the company’s finances has been “enormous,” he added.
“With each quarterly report, it becomes increasingly clear that our financial situation is not sustainable,” Hudon said.
He said the organization has taken some steps to try to address these challenges, including suspending some investments to focus on core priorities and cutting costs across the board.
The Crown corporation’s latest annual report used similar language, noting that it has recorded “significant” annual losses since 2018. Last year’s loss was the second-largest on record, at $748 million.
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Hudon said the company has worked hard to offer new services to make Canada Post more competitive in parcel delivery, as the e-commerce market is expected to double over the next decade.
The company has also faced a significant reduction in mail deliveries, which were once its main source of revenue.
Over the past two decades, the organization has gone from delivering 5.5 billion letters a year to about two billion, President and CEO Doug Ettinger said Wednesday.
More than a decade ago, Canada Post pivoted its business to meet growing demand for parcel delivery, Ettinger said at the meeting. However, he said the company has seen its market share in parcel delivery fall by half since 2019.
“We’re doing our best to compete in this ever-changing parcel delivery market, but we’re doing it with an operating and delivery model that was designed for an older era,” he said.
It doesn’t help that Canada Post is the only competitor in the category that doesn’t offer weekend delivery, he said.
To be competitive, Canada Post needs more flexibility in its operations and investments, as well as on the regulatory front, Ettinger said.
In August, Canada Post reported a second-quarter pre-tax profit of $46 million, as one-time sales of subsidiaries helped offset an operating loss of $269 million.
That compares with a pretax loss of $76 million in the first quarter of the year.
In January, Canada Post and Purolator Holdings Inc. announced they were divesting their shares in their subsidiaries Sci Group Inc. and Innovapost Inc. The transactions closed earlier this year.
The 2023 annual report also notes that Canada Post has been operating without a government-approved business plan since 2020, “which includes assumptions and projections that are now outdated.”
The company said it was still awaiting approval of a new business plan that would take it through 2028, which “emphasizes the need to work with our shareholder to achieve financial self-sufficiency.”
—With documents from the Canadian Press
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