Do Canadians Need Canada Post?

Do Canadians need Canada Post?

I recently asked that question on LinkedIn, and was met with quite a few comments noting that many small businesses and most Canadians living in rural areas heavily rely on Canada Post, and that even many courier services use Canada Post to service "the last mile."

Fair enough.

So perhaps the better question is: do Canadians need Canada Post as it exists today?

Because, according to Canada Post's 2023 Annual Report, "Canada Post’s financial situation is unsustainable."

The report then explains why: "For 2023, the Corporation recorded a loss before tax of $748 million, compared to a loss before tax of $548 million in 2022. From 2018 to 2023, Canada Post lost $3 billion before taxes. Without changes and new operating parameters to address our challenges, we forecast larger and increasingly unsustainable losses in future years."

There are many Canadians, I'm sure, who believe that Canada Post is an essential organization for our country, and, as such, should not be concerned about operating at a loss year after year.

I am not one of those Canadians.

I believe all organizations should strive to operate efficiently and effectively, and that even if the ultimate goal isn't to generate a profit (as is the case for education and healthcare, to name but two examples), acting in a fiscally responsible manner is essential.

So, how can Canada Post become more fiscally responsible?

Becoming more competitive against other shipping options that consumers have available would be a great start. The challenge is that this is easier said than done.

Here's an example: the last time I needed to send a package, I priced out my shipment using both Sendle and Canada Post.

Below is a screenshot of the cost each service quoted for my delivery.

Using Sendle:

✅ Cost to ship: $12.54

✅ A driver would pick up my package from my house.

✅ It would arrive in 1-3 days.

✅ $100 of liability coverage insurance included.

Using Canada Post:

❌ Cost to ship: $17.81 (Cheapest option; 42% more expensive than Sendle)

❌ I need to drop off my package at a Canada Post mailbox or my local post office.

❌ It would arrive in 3 business days.

❌ No liability coverage.

Choosing which carrier to use was not a difficult decision.

This isn't the first time I've compared prices between Sendle and Canada Post, and every time I have, Sendle was the least expensive option. Admittedly, I don't send many packages, but if I did, I certainly wouldn't want to pay 42% more with every shipment.

(And since Canada Post's package delivery pricing is already uncompetitive against alternative options, it can't increase rates to generate additional revenue: raising prices will simply make using Canada Post an even less attractive option.)

Of course, Canadians use Canada Post for more than just parcel delivery, and parcel delivery isn't the only way that Canada Post generates revenue: there's also letter mail!

Except, according to that 2023 Annual Report mentioned above, Canadian households received an average of only 2 letters per week in 2023 compared to 7 letters per week in 2006. That's a steep decline.

Letter mail was traditionally a major revenue source for Canada Post, yet it has been declining for several years as businesses encourage e-statements and consumers choose email and messaging apps to stay in touch.

Okay, what about Direct Marketing? We need Canada Post for that, right?

Yes, many businesses still rely on Direct Marketing, and it remains a significant revenue stream for Canada Post...

... but Direct Marketing has to compete with digital advertising for consumer attention and marketing budgets.

And be honest: as a consumer, would your life be significantly worse if direct mail disappeared tomorrow?

(Hint: according to research from Canada Post, "33% of Canadians feel positive about mailbox advertising"... which means 67% do not.)

To sum up:

❌ Sending packages via Canada Post is more expensive than alternative carriers.

❌ Canadians are receiving less letter mail than ever before.

❌ Direct Mail isn't something most Canadians are likely to miss.

Given the facts, Canada Post's operating losses will likely continue for the foreseeable future unless significant changes are made to the organization and how it operates.

Interestingly, Canada Post's workers are set to strike this Friday.

But if I were in charge of the union representing Canada Post workers, I'd be thinking long and hard about whether that makes sense.

Because Canadians are relying on Canada Post less than they have in the past, a trend that is likely to continue as a greater number of Canadians adopt electronic alternatives to paper and as more nimble, tech-savvy alternate carriers continue to emerge... which means the union isn't exactly negotiating from a position of strength.

Because the Crown Corporation is in a precarious financial situation, with expenses already exceeding revenues, and taxpayers are unlikely to support worsening the situation by increasing employee compensation costs.

But most importantly, because the last thing I'd want to do is to force Canadians to find alternatives for their postal needs during a strike period -- the second postal strike they've endured in the past 12 months -- and risk having them not come back once the strike is over.