How Canada Post lost $3B in six years | About That

I'd be willing to bet that no matter how bad you think Canada Post's finances are right now, it's actually worse to begin with. Canada Post loses a mind-boggling amount of money every year, $748 million last year alone and the year before that $548 million - 490 - 779 - 153 - 276 in the last 6

years

, which by the way is how long it's been. Since Canada Post last turned a profit, it has

lost

almost $3 billion. Now, something most people don't know about Canada Post is that they are a crown corporation, but they don't actually receive taxpayer money at all, so they have to make money to survive, but on their own. annual report,

post

al mail volumes have eroded significantly.

There has been a significant decline in our cash position. Canada Post's financial situation is unsustainable. It's long standing. our role is under significant threat, we expect to fall below our required operational and cash reserve requirements by early 2025, let me translate the last one for you, they will run out of money early next year, they are in very deep trouble, they are in very deep problems, so how did Canada Post get into this situation and what would it take to save it? 2006 was a good year for Canada Post, when

post

al mail volume peaked at 5.5 billion pieces of mail, but since then, for almost 20

years

, the number of letters Canadians send to each other has been at freefall.

This is what the last 10 looked like: 6.1% - 6.8% minus 8.8% and continues to decrease last year. Canada Post delivered only about 2 billion letters in the way I So to speak, my university has about 35,000 students. Imagine if 30,000 of them just disappeared and suddenly we were a university of 5,000, it would be catastrophic, that is what is happening to the post office and it is important to underline how lucrative letters were sent to Canada Post. Canada Post used to generate millions of dollars in profits every year, every business day of the year. Across Canada, the post office handles about 10 million pieces of mail.

Canada Post says it made almost $100 million last year and expects even bigger profits in the future. It built up huge cash reserves. Experts we spoke to said there has sometimes been a profit margin of up to 50% on the delivery of letters, which is a phenomenal margin and Canada Post has a monopoly on mail, so by law only Canada Post can deliver mail to or from any point in the country at the standard postal rate. In exchange for this exclusivity, Canada Post must follow a very simple requirement of delivering mail five days a week to all Canadians everywhere each address has one. receive services somehow in return they get their Monopoly in the mail.

The problem is that Monopoly is worth less every year and it is actually a kind of liability. Here's how many new addresses Canada Post had to add to its list of millions of Canadian addresses. It has to run 5 days a week, rain or shine, and those routes can become increasingly expensive as communities expand and new homes are built further and further from city centers. We will have 50,000 Canadian postal workers marching in the streets. of Canada 5 days a week 52 weeks a year to 17.5 million addresses with nothing to deliver and the deficits will skyrocket to three four five billion dollars a year and I simply cannot imagine any future government no matter what party say well now we agree with that, this problem could have been surmountable if it were not for a second fatal blow for Canada Post, a race in which it is falling further and further behind the crown.

The corporation says the number of packages is staggering Amazon and online shopping in general has really transformed the way we think about mail. We're not so excited about cards anymore. Now it's all about when my package arrives and on time. Canada Post was really competitive in this space named after Canada's first black carrier. Canada Post's newly launched package processing. The plant here in Scaro is being called the country's new e-commerce hub. Last year it opened a new package sorting facility in Scarboro, Ontario. It could handle a million packages per day, process an incoming package and have it ready for shipment in less than 4 minutes.

It doubles Canada Post's capacity in the Greater Toronto Area and is a critical hub for the entire network. This was important because just before the pandemic, Canada Post controlled a whopping 62% of the package delivery market, but just last year online shopping continued. Canadians are receiving more packages than ever before. Canada Post's revenue paradoxically declined. Canada Post in the last 24 to 30 months has

lost

half of its market share and parcels not because the market is disappearing but because they are not competitive. Smaller, more nimble companies moved in like I don't know about you, but nowadays I feel like every time I receive a package it's sent to me by a company I've never heard of.

These are gig drivers who own their own car and come. on Friday night at 10:00 and they leave it on my porch their business model low skill low overhead low cost their employees often don't have the same type of benefits overtime pay vacation time bargaining power if they have a union all people have stopped mailing and they stopped mailing last week mail carriers continue their program of rotating strikes nationwide contract there are a lot of honks a lot more collectors now than there were last hour and remember that Canada Post for law has to maintain operations everywhere, even in those parts of the country that are not as profitable because people are too dispersed and it is more difficult to get to the bigger cities where all the money is, the competitors are like piranhas and the Canada Post knows that financially things are very challenging, the reality is that things have moved so quickly in the last 2 years that the platform that we have built in terms of increasing our parcel volumes due to e-commerce has been torn apart by competition and in Canada Post's own annual report we are the only major carrier. which does not offer regular 6-day-a-week deliveries in major urban centres, some competitors offer 7-day-a-week deliveries nationwide.

We didn't expect our market share to drop so quickly and for competitors to take up much of the volume. Parcels are the most important way Canada Post makes money about half of its total business, but every slice of this pie - parcels, snail mail, junk mail - have all gotten smaller, so Canada Post, the bread and butter of letter delivery, is crumbling and the burgeoning parallel delivery market. is too full, how to solve this problem well? It depends on who you ask. Canada Post's position is that it should be released from the requirement to make daily deliveries to all Canadian postal services.

The charter was implemented in 2009 and has not changed. a lot um and that dictates how and when mail is delivered, but that was back when Netflix delivered DVDs by mail, so the world has changed a lot, so maybe daily letter delivery will become every other day. You also want your employees to be more flexible, like maybe. deliver packages on weekends without it being considered overtime, but the union sees things differently, so it believes that the way for Canada Post to survive is actually to expand its services to offer more to Canadians and that could be a way that the company could attract more money, so one of the things they often point out is postal banking, it basically allows you to do banking services in a post office, another thing is senior registration, for which your postman literally also searches the elderly and then brings something. make a profit that way, but if you ask our expert Ian Lee, he proposes something a little more drastic: we don't need 8,000 post offices because we don't go there anymore and they cost between a billion and a half and two billion a year.

I've argued that they should be completely franchised or closed, that's very radical for a lot of people, but if you go to any post office, I go to them from time to time because I do the research and there's no one there, there's just no one there, so you kill the post offices or most of them and you kill home delivery right away. You took out about $2 billion dollars of savings to reinvest in Parcels you kill home delivery immediately, by that you mean end door to door. Joint letter delivery, everyone receives their mail through a community mailbox or some other centralized point.

Now you may be wondering where the federal government lands in all of this. I mean, they own Canada Post, they regulate it, but right now they're pretty non-committal, but is it time to end Canada Post's daily mail delivery requirement? It is something that is an option that Canada Post is apparently considering, obviously speaking with unions, leaders and workers as it is developing one of these this option and among many others as well, but this is true, they are on the clock, remember that the forecast itself of Canada is that they will run out of money early next year, so what happens next has to happen quickly and with a lot of money behind it.