Question Period Note: Canada Post Corporation Financial Stability

On May 3, 2024, Canada Post Corporation released its Annual Report and recorded a loss before tax of $748 million for 2023. Canada Post’s mandate is to be financially self-sufficient and it is striving for ways to do that while facing continued challenges of lower revenue and volume trends. Canada Post continues to provide Canadians with affordable postal rates.

• Canada Post is a Crown Corporation that operates at arm’s length from the Government and its operations are funded by the revenue generated by the sale of its products and services, not taxpayer dollars
• But like so many other businesses, Canada Post needs to adapt to the dramatic changes in how Canadians live and work today to remain relevant and viable
• Over the last 20 years, the amount of mail Canadians receive has declined by more than 50 per cent, while the number of addresses has increased by more than three million. This has resulted in lower revenues and higher costs
• Canada Post connects the country from coast to coast to coast
• We continue to work with the corporation to examine opportunities to improve the financial sustainability of its important operations  

If pressed on financial situation:

• Results were negatively impacted by the post-pandemic surge in parcel delivery competition, the ongoing erosion of Transaction Mail, and continued growth in addresses and delivery costs
• Since 2019, Canada Post has been increasing parcel capacity and improving service across the country, as consumers have shifted to more retail spending online
• However, growth in the parcel delivery business has not been enough to make up for the declining mail volumes and revenues
• Intensifying competition in the parcel delivery landscape has created significant new challenges that the Corporation must address to ensure the viability of the national postal service

If pressed on increase to postage rates:

• Canada Post understands the importance of the delivery service it provides and works to minimize the impact of price changes on all customers, ensuring any increases are fair and reasonable
• On May 6, 2024 the price of postage stamps purchased in a booklet, coil or pane increased by 7 cents to 99 cents per stamp. The price of a single domestic stamp increased by 8 cents, to $1.07

The operations of Canada Post are funded by the revenue generated by the sale of its products and services, not taxpayer dollars.

Parcels 

In 2023, Parcels revenue declined by $91 million, or 2.5 per cent, as volumes rose by 10 million pieces, or 3.7 per cent, compared to 2022. Volumes rose due to increased competitive offerings, higher online shopping returns, and additional business from new and existing ecommerce customers. Improved service performance, the introduction of late induction in key markets like the Greater Toronto Area, and the 2023 launch of carbon-neutral shipping, also contributed to domestic volume growth. Domestic Parcels revenue declined despite an increase in commercial rates. The decline in revenue was partly due to decreased consumer spending, more lightweight items moving through the Canada Post network, and a decline in fuel surcharges linked to market rates. Competitive commercial consolidators also took more business from the conventional inbound postal network.

Transaction mail

Transaction Mail revenue fell by $126 million, or 5.2 per cent, in 2023 as volumes declined by 117 million pieces, or 5.0 per cent, compared to 2022. This was largely the result of consumers and mailers continuing to shift to digital channels. Throughout 2023, regulated stamp prices remained at 2020 levels. In April 2024, Canada Post received Governor in Council approval to increase its regulated postage rates, which take effect May 6, 2024. 

Direct marketing

Direct Marketing revenue declined by $3 million, or 0.4 per cent, in 2023 as volumes increased by 17 million pieces, or 0.4 per cent, compared to the prior year. Total volumes in 2023 were below pre-pandemic levels, with the decline in revenue driven by economic uncertainty and businesses choosing digital marketing options. Canada Post Neighbourhood Mail™ revenue increased mainly due to new customer relationships and product development. Direct Marketing remains an important revenue generator as the company continues to look at solutions to help businesses and consumers connect.

Group of companies

In 2023, the Canada Post Group of Companies recorded a loss before tax of $529 million, compared to a loss before tax of $292 million the previous year. The Group of Companies results were due to the Canada Post segment loss. Purolator recorded a profit before tax of $293 million compared to $317 million in 2022, while SCI’s profit before tax was $14 million compared to $16 million the previous year. 

In early 2024, Canada Post and Purolator announced the divestiture of 100 per cent of the shares of SCI Group Inc. (SCI) and Innovapost Inc. (Innovapost). The SCI transaction closed March 1 and the Innovapost divestiture closed April 15.

• Canada Post recorded a loss before tax of $748 million in 2023
• In 2023, revenue fell by $240 million, or 3.3 per cent, compared to the prior year, dropping across all three lines of business – Parcels, Transaction Mail and Direct Marketing. The 2023 loss before tax was $200 million more than the $548 million loss before tax in 2022