Inside Logistics

Canada Post sees Covid-19 related losses in Q2

Pandemic and arbitrator's ruling increased losses


August 25, 2020
by

OTTAWA – Canada Post recorded a loss before tax of $378 million in the second quarter of 2020. This increased loss was largely due to the  impact Covid-19 had on revenue and costs, combined with the added costs stemming from the June 2020 arbitrator’s ruling. The ruling resulted in new collective agreements with the Canadian Union of Postal Workers (CUPW).

With people at home and businesses closed during the pandemic, Canada Post saw a dramatic shift in what it was asked to deliver. Online shopping drove unprecedented growth in parcel volume and revenue, but because Canadians and businesses mailed and advertised less, the transaction mail and direct marketing volume and revenue decline exceeded the growth in parcels.

The estimated total revenue shortfall due to Covid-19 was $46 million while increased costs related to Covid-19 were an estimated $118 million. The total negative financial impact due to Covid-19 was an estimated $164 million.

The arbitrator’s ruling on June 11, 2020 concluded a comprehensive process that followed weeks of rotating strikes in late 2018. The new collective agreements, one for urban employees and another for Rural and Suburban Mail Carriers (RSMCs), added net costs of $114 million in the second quarter. Most of this was related to expanded eligibility for post-employment healthcare benefits for RSMCs.

The segment recorded a loss before tax of $444 million on revenue of $3.3 billion for the first two quarters of 2020. That compares to a loss before tax of $27 million, also on revenue of $3.3 billion, for the first two quarters of 2019. Although Covid-19 and the new collective agreements with CUPW contributed to the loss, the Canada Post segment would have still incurred a loss without these factors.

Parcels results

Early in the second quarter, parcel volumes were as high as in past peak Christmas seasons as, with physical stores closed due to the pandemic, Canadians met their needs by shopping online. Parcels revenue grew by $226 million, or 35.4 percent, in the second quarter and by $279 million, or 23.3 percent, for the first two quarters, compared to the same periods in 2019. Volumes grew by 26 million pieces or 35.5 percent in the second quarter, and by 30 million pieces or 21.2 percent in the first two quarters of 2020, compared to the same periods in 2019.

Group of companies results

The Canada Post Group of companies reported a loss before tax of $333 million in the second quarter of 2020, which was a $344 million change from a profit before tax of $11 million for the same quarter in 2019. This loss was due to the Canada Post segment.

For the first two quarters of 2020, the Group of Companies recorded a loss before tax of $386 million, a decrease in profitability of $436 million, compared to the same period in 2019. It is estimated that Covid-19 contributed $194 million to this loss.

The Purolator segment recorded a profit before tax of $39 million in the second quarter of 2020, a decrease of $13 million compared to the same period last year. For the first two quarters of 2020, Purolator recorded a profit before tax of $49 million, a decrease of $15 million compared to the same period last year.