Rural communities need certain basic functions to survive in the long term.
Whether it’s medical service, the local school, rural broadband, or a dry goods store, rural communities struggle to keep enough services around. Could mail delivery be one the next big battles to keep alive?
For many rural communities in Canada, Canada Post is the only way to deliver or receive packages and mail. Urban residents have additional private options like FedEx, UPS or DHL, which do not service many rural communities or areas.
In 2019, Canada Post lost $153 million after delivering 7.7 billion pieces of mail and parcels. Reporting on the first quarter of 2020 this week, the postal service said losses added up to $66 million from January through March. According to the Crown corporation, one of the shifts in business has been more parcels due to online shopping, which increases resources required, and fewer companies doing direct advertising mail-outs. Purolator, which is owned by Canada Post Group of Companies, made a pre-tax profit of $152 million in 2019.
During COVID-19 the company has seen record level of parcel shipments, according to a press release from the company:
Canada Post is delivering in record numbers and also handling a wider variety of items. With parcel deliveries growing at a record pace from April to May, Canada Post hit an all-time, one-day record on Tuesday, May 19 with 2.1 million parcels delivered to Canadians. That’s roughly three times the norm for this time of year.
Once a crown corporation that pencilled in a profit, Canada Post has struggled to find consistent profitable footing as people mail fewer letters and online shopping grows, which increases packaging size and handling costs.
It is hard to imagine that the rural component of Canada Post’s business is very profitable given the limited ability to expand volumes over the fixed cost. As pressure builds on Canada Post to become profitable again, decisions will need to be made which very likely could impact the services to rural communities.