Canada Post lost $153 million before tax last year as intense e-commerce competition slowed growth of its parcel business and an ongoing shift toward online communication prompted mail operation declines.
The Crown corporation, which delivered more than 7.7 billion pieces of mail and parcels last year, said packages require different resources than mail delivery that are weighing on its profits as tech giants such as Amazon expand their reach.
“Parcels processing and delivery requires more technology, space in buildings and vehicles, and time interacting with customers, making it significantly more costly than sorting and delivering letters,” Canada Post said in a release after markets closed Wednesday.
While the number of addresses receiving daily mail and parcel service climbed by 168,000 in 2019, residents and businesses increasingly chat, advertise and do business digitally, Canada Post said.
Bracing for pandemic impact
The impact of the pandemic on Canada Post was not yet apparent in the numbers released Thursday, but the Crown corporation said it has the potential to significantly affect its business in 2020 “and, possibly, going forward.”
Shippers are in uncharted territory as the crisis upends delivery patterns, with surging consumer demand mitigating a drop in corporate orders amid border closures and travel controls.
Residential deliveries have gone up at an “equal if not greater pace” than the drop in business-to-business parcels as house-bound Canadians order items online, Purolator Inc. chief executive John Ferguson told The Canadian Press in late March.
The Canada Post Group of Companies, which owns the vast majority of the profitable Purolator, reported a loss of $23 million before taxes for 2019, compared with a loss of $118 million 2018. The net loss was $14 million compared with a net loss of $93 million in 2018.
Purolator itself turned a before-tax tax profit of $152 million, a roughly five per cent decrease from $161 million of black ink in 2018.
Canada Post said its parcels revenue climbed by $232 million last year, topping $2.73 billion to exceed revenue from letters, bills and statements for the first time.
Revenue from that “transaction mail,” sometimes known as snail mail, dropped by $69 million, or 2.5 per cent, year over year to $2.71 billion, with volumes falling by more 192 million pieces or 6.4 per cent to 2.8 billion.
The postal service’s direct marketing revenue decreased by $32 million or three per cent to generate roughly $1.1 billion, with volumes dropping by 75 million pieces or 1.6 per cent.