Customer Base
Canada Post services approximately 15.3 million addresses, of which only 5 million receive door-to-door mail delivery. The balance of the 10.3 million addresses are served by a centralized point, with 3.9 million of those addresses having a neighbourhood community mailbox as their centralized point of delivery.The number of delivery addresses has been increasing at an average of 169 thousand addresses per year over the past 5 years. At an average annual cost of 168 dollars per address, operating expenses related to new addresses are increasing by 28.4 million dollars per year.
Annual Profits and Revenues
Canada Post has annual profits of 118.2 million dollars (5 yr average) on an annual revenues of 7.5 billion dollars (5 yr average). |
| Source: Canada Post 2012 Annual Report |
The Canadian Union of Postal Workers frequently cite an 18 year average annual profit of 139 million dollars both to provide an inflated view of Canada Post's 'current' viability and to imply that this level of profitability can continue. However, past profitability can never be used as an predictor of future profitability.
Total Mail Volume
Canada Post has a 5 year average Total Mail Volume of 10.8 billion pieces. Total Mail Volume is broken down by market segment:- Direct Marketing - Addressed and unaddressed Admail,
- Transactional Mail - Lettermail,
- Parcels.
Canada Post has a the following 2011 - 2012 two year average Mail volumes:
Total mail volume has declined by 2 billion pieces over the past 5 years. Physical mail delivery has declined so dramatically over the past 5 years that the inclusion of data from prior to 2008 is highly questionable for calculating the average mail volume and forecasting purposes.
Canada Post attributes mail volume declines to an "historic shift" by Canadians to digital communications. "Businesses and consumers have an abundance of choice when selecting products and their preferred modes of communication, and competition is aggressive." Canada Post has declared the digital transformation causing the the erosion of their core mail business as their greatest challenge.
had a letter mail volume of 5 billion pieces in 2006. By 2012 this volume had declined to only 4 billion pieces, despite the growth in delivery addresses. 30 percent of that decline occurred in 2012 alone, and 2013 is showing similar declines!
Lettermail declines in 2013 led to Canada Post recording a 2013 second quarter loss of 104 million dollars which does not bode well for 2013 profitability.
In addition to Lettermail declines, Admail volumes are also down by approximately 1 billion pieces over the past 5 years. Commercial customers are redirecting marketing to other media channels such as the multitude of online marketing platforms, which can provide lower cost per customer response and realtime analytics
Parcels are the only market segment to show any volume growth, "fuelled by fast-growing e-commerce segment, which saw 2012 revenue from the parcels line of business increase by $79 million compared to 2011. Parcel volumes also increased by 10 million pieces in 2012 compared to 2011."
Despite some claims, it is completely delusional to claim that physical mail volume decreases can be reversed.
Clearly, the slight growth in parcel volume and revenue cannot offset the deep Transactional Mail and Direct Marketing business losses! A clear example of this fact is that Canada Post posted a 2013 second quarter loss of 104 million dollars. - Direct Marketing Volume of 5.1 billion pieces,
- Transactional Mail volume of 4.5 billion pieces,
- Parcel volume of 148 million pieces.
Mail Volumes Trending Downward
While the number of mailing addresses serviced by Canada Post has been growing steadily to over 15 million postal addresses in 2012, Total Mail Volume has been declining at an accelerated pace.Total mail volume has declined by 2 billion pieces over the past 5 years. Physical mail delivery has declined so dramatically over the past 5 years that the inclusion of data from prior to 2008 is highly questionable for calculating the average mail volume and forecasting purposes.
 |
| Source: Canada Post 2012 Annual Report |
Canada Post attributes mail volume declines to an "historic shift" by Canadians to digital communications. "Businesses and consumers have an abundance of choice when selecting products and their preferred modes of communication, and competition is aggressive." Canada Post has declared the digital transformation causing the the erosion of their core mail business as their greatest challenge.
Transaction Mail Declines while the Number of Addresses Increases
The number of delivery addresses that Canada Post must service has been increasing steadily, at an average of 169 thousand addresses per year, resulting in an average operating cost increase of 28.4 million per year. Operating costs related to are similarly increasing as a result.had a letter mail volume of 5 billion pieces in 2006. By 2012 this volume had declined to only 4 billion pieces, despite the growth in delivery addresses. 30 percent of that decline occurred in 2012 alone, and 2013 is showing similar declines!
Lettermail declines in 2013 led to Canada Post recording a 2013 second quarter loss of 104 million dollars which does not bode well for 2013 profitability.
AdMail Declines
Parcel Volume Growth
Despite some claims, it is completely delusional to claim that physical mail volume decreases can be reversed.
Transformational Impact
According to a report "The Future of Postal Service in Canada" from the Conference Board of Canada, the foremost independent, not-for-profit research organization in Canada, Canada Post is facing a 1 billion dollar deficit by 2020.
Personally, I trust an independent not-for-profit organization more than I trust a labour union with a clear conflict of interest and who are described by their friend, Kyle Buott, President of Halifax-Dartmouth and District Labour Council as "the most militant union in the country."
