Canada Post Forecasts Sector Losses Even With Booming Parcel Deliveries
09 Sep, 2019

Today at SendMyShipment we bring to you the latest prediction on the financial outlook of Canada Post, detailing the corporation's expectations into the nearest future.

Ottawa, ON - Canada Post just released its predictions and forecasts for the coming years. Despite what appears to be a booming season for parcel deliveries, Canada Post predicts it will struggle to remain profitable in the coming years. This has been attributed to the continuous decline in letter mail and higher employee costs.

The Crown Corporation had said in its corporate forecast in parliament that it is expecting modest gains between $10 million and $125 million from 2019 through to 2023. Even then, it reiterated that the modest gains would be from its Purolator subsidiary while expecting the Canada Post base segment to post losses.

In the five-year plan, Canada Post estimates that at least $3.6 billion would be needed if the corporation is to stay competitive and in tune with global e-commerce growth, as a shipping service provider that can meet modern needs of both the shipper and customer.

On the one hand, employee costs continue to rise, largely due to the rural pay equity ruling of last fall. The ruling accounted for an estimate of $264 million in loss for the Canada Post in 2018. Going forward, this is expected to add another $140 million in yearly costs.

In its submission before parliament, the corporation had said it could borrow as much as $500 million by 2023. This borrowing will cover capital needs and special employee pension plan solvency payments. This is expected to cost over $500 million by 2020 and more than $1.8 billion by 2023.

Canada Post forecasts a sector loss of about $22 million for 2019. This is as total revenue growth at 3.5% ($234 million), thanks to a 13% increase in parcel volume, that still gets offset by another 5% decline in letter mail activity.

As contained in the document, the Corporation made it known that it spent $4.7 million towards dismantling about 2,280 mailbox sites in a total of 12 municipalities, acting on the order of the Liberal government since the project only began but didn’t complete door-to-door delivery conversion.

Regardless, Canada Post appears to be in a financially viable state at the moment. However, the forecasted growth in parcel volumes and revenue falls short of what should be expected for the corporation to not just profit in the short term but also to sustain in the long term. 


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