Canada Post, the Crown corporation, has taken significant steps to address its financial challenges, including selling off its IT and logistics departments. However, experts suggest that these measures may not be enough to secure its future, given the organization’s substantial losses in recent years.
Ian Lee, a business professor at Carleton University, believes that Canada Post must go beyond selling or outsourcing parts of its operations. Despite a drop in inflation from its peak, Canada Post reported a substantial loss of $290 million in the third quarter of 2023. Lee emphasizes the need for Canada Post to embrace e-commerce aggressively, considering the increasing demand for online shopping and home delivery services.
The future of Canada Post, according to Lee, lies in repositioning itself as a partner for e-commerce companies and recapturing the business it has lost to major online retailers like Amazon. He also suggests that Canada Post could collaborate with logistics companies to optimize “the last mile” of delivery, a crucial part of the delivery process that accounts for over half of delivery costs.
However, achieving this shift towards e-commerce requires cost reductions and collaboration with unions, as Canada Post’s current cost structure is not competitive with independent gig delivery services or companies like FedEx.
The Canadian Union of Postal Workers (CUPW) advocates for expanding Canada Post’s services to ensure its financial sustainability. They propose offering additional services such as postal banking and check-in services for seniors to generate new revenue streams and create jobs while addressing the evolving needs of Canadians.
Nita Chhinzer, a human resources expert and professor at the University of Guelph, suggests that Canada Post should focus on its core services rather than attempting to diversify. She argues that previous attempts to explore logistics and IT, while increasing revenue, did not boost profitability. Chhinzer points out that Canada Post faces challenges in entering the competitive e-commerce market, as it was a late entrant compared to competitors who had already established themselves.
In summary, Canada Post faces significant challenges in its quest for financial sustainability, and while it has taken some steps, it may need to undertake more profound changes to secure its future in an evolving postal and e-commerce landscape.