Canada Post is selling off its IT and logistics departments, a move business experts say is an essential first step in saving a Crown corporation that lost more than half a billion dollars in 2022.
“Canada Post is disappearing before our eyes,” said Ian Lee, a business professor at Carleton University in Ottawa who has researched the decline of Canada Post.
“They’re starting to restructure because they’re starting to finally face that reality.”
Last week, Canada Post announced it will sell its in-house IT business, Innovapost, to Deloitte Canada. As part of the outsourcing deal, Canada Post will maintain an IT leadership team while most of Innovapost’s 750 person workforce is absorbed by Deloitte.
“It was determined the current shared-service model was not providing the speed and agility needed to compete today and in the future,” said a statement from Canada Post.
Canada Post declined CBC’s multiple requests for an interview and instead provided a written statement.
“For the last two years, Canada Post has been executing a comprehensive transformation plan focused on serving the changing needs of Canadians and Canadian businesses,” Canada Post spokesperson Janick Cormier wrote.
“The plan positions the company for growth in Canada’s e-commerce market while delivering on its core mandate of providing reliable delivery of mail, packages and parcels to every Canadian address.”
The lucrative ‘last mile’
Lee said selling off or outsourcing parts of Canada Post’s operations won’t be enough to save it. In the third quarter of 2023, the company lost a whopping $290 million.
“The future of Canada Post is not in pretending that they can deliver letter mail when it’s collapsing by 6 to 8 per cent per year by number of pieces,” Lee said.
Canada Post must move aggressively and quickly into e-commerce, Lee said. Sales of products purchased online and delivered to people’s homes are soaring.
“This future is in reinventing themselves as a partner of e-commerce companies and trying to get back that business that they gave up, and lost competitively, to the Amazons of the world,” he said.
Lee said Canada Post could follow the U.S. Postal Service’s example and work with major logistics companies to cover “the last mile” — the final part of a package’s journey, which accounts for more than half of delivery costs.
Canada Post losses a big problem for small communities
The post office is a community hub for many small towns, but financial losses at Canada Post have forced many rural outlets to close.
“The U.S. Postal Service is partnering with some of these big logistics companies who bring in millions of parcels. They basically sort them down to the local postal code of the local post office,” he said.
“The one area where Canada Post has a competitive advantage is the last mile. It goes to 16 million addresses. That is the last mile.”
But Canada Post would need to bring its costs down to make a plan like that work, Lee added.
“They’re going to have to work with [the union] because their cost structure is not even closely competitive with the independent gig delivery or even … FedEx,” he said.
Expand services to survive, union says
The Canadian Union of Postal Workers (CUPW), which represents 60,000 Canada Post workers, would not provide CBC News with an interview. (CUPW does not represent any of the employees working at the businesses being sold off.)
In a previous statement, CUPW said it wants to see Canada Post offer more services.
“CUPW has been advocating for a comprehensive plan which would work to ensure the future financial sustainability of Canada Post by expanding services,” spokesperson Siân Griffiths wrote in an email.
The postal workers union says the key to Canada Post’s future is in expanding its services. (Justin Tang/The Canadian Press)
The union suggests Canada Post could provide more postal banking, or start performing check-in services for seniors.
“This would not only generate new streams of revenue but maintain and create jobs while meeting the growing needs of people across this country,” Griffiths wrote.
E-commerce ambitions might come too late
But Nita Chhinzer, a human resources expert in downsizing and a professor at the University of Guelph, said Canada Post needs to focus on its core services.
Attempts to explore logistics and IT didn’t boost the corporation’s bottom line, she said.
“While it increased revenue, it also increased cost in ways that didn’t increase profitability,” she said.
Canada Post has been trying to be too many things at once, she said.
“You can’t be the unionized company that treats its employees well, that’s got a large geographic scope, that has a social responsibility as a Crown corporation to ensure accessibility to everybody, plus the company that is going to offer the lowest price,” she said.
Chhinzer said she also questions Canada Post’s chances of successfully breaking into the crowded field of e-commerce. In September, the corporation opened a new processing facility in the Greater Toronto Area that it says will be able to process one million packages per day.
“Canada Post … was the last to truly enter the parcel market. They launched their initiatives well after their competitors had cemented themselves,” Chhinzer said.
While the e-commerce sector saw 3.5 per cent growth last year, Canada Post saw no growth in that area.
“There are significant critical flaws right now with how Canada Post is operating,” Chhinzer said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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