Amid a strike by Canada Post workers, I can’t help but think of buggy whip manufacturers. How can one not consider a similar fate for the public enterprise delivering letters and parcels? When was the last time you wrote a handwritten letter and mailed it to a friend? When did you last send a check to pay a bill? In an era of text messages, FaceTime, emails, electronic payments, and parcels delivered in a day, I wonder about the long-term prospects for Canada Post.
The numbers don’t lie: Canada Post reported a pre-tax loss of $748 million in 2023, compared to a loss of $548 million in 2022. In the third quarter of 2024, the corporation declared a pre-tax loss of $315 million, up from the $290 million lost during the same period the previous year. According to La Presse, “these losses are primarily due to the continued decline in traditional mail volumes and increased competition in the parcel delivery sector.”
Canada Post long had its raison d’être. In a country as vast as ours, the Crown corporation played a crucial role for decades, ensuring Canada’s economic and social development. But times have changed, and things won’t get better for the company.
I have questions: Can Canada Post adapt and compete with private companies for parcel delivery? Is parcel delivery a service a Crown corporation must offer? Is letter distribution still an essential service?
Over time, most businesses or industries are destined to disappear. Investors must constantly keep this in mind, especially in our technological era, which continues to disrupt entire sectors of the old economy. This movement will likely accelerate as we enter the age of artificial intelligence.
Philippe Le Blanc, CFA, MBA
Chief Investment Officer at COTE 100
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