Canada Post Faces Funding Exhaustion by Early 2025

Canada Post’s financial woes have deepened, with the Crown corporation revealing a staggering pre-tax loss of $748 million in 2023, heightening concerns that it could deplete its operating funds within the next year. In its annual report released on Friday, the company warned of “larger, unsustainable losses in future years” unless significant changes are made to its operating model.

The dire situation has been exacerbated by continuous losses since 2018, totaling $3 billion over the last six years. Despite an uptick in package volumes, Canada Post attributes its financial challenges to dwindling revenue from letter mail delivery and parcels. Letter mail volumes have steadily declined since their peak in 2006, with less than 2.2 billion letters delivered in 2023.

Moreover, the company faces stiff competition from new, privately owned delivery firms leveraging “low-cost labour” business models, which offer lower prices and enhanced convenience, particularly with evening and weekend services. Canada Post’s attempts to penetrate the e-commerce market have faltered, with its market share plummeting from 62 percent to just 29 percent.

Recognizing the urgency of the situation, Canada Post has embarked on a transformation plan, divesting its IT and logistics departments earlier this year. Despite heavy investments in upgrading facilities and enhancing package delivery capabilities, the corporation is grappling with escalating delivery costs, exacerbated by the addition of approximately 200,000 new addresses annually.

Doug Ettinger, Canada Post’s president, affirmed the company’s commitment to navigating these challenges and driving organizational improvements. Meanwhile, negotiations between Canada Post and the Canadian Union of Postal Workers (CUPW) for the next collective agreement are ongoing, with workers advocating for cost-of-living increases.

With its financial predicament reaching a critical juncture, Canada Post faces an uphill battle to secure its long-term viability amidst evolving market dynamics and operational challenges.