Canada Post has reported more than 8% growth in parcel revenues and volumes in its third quarterto 27 September, with the firm forecasting a 20% increase in holiday season volumes in the final
weeks of this year.Parcels revenue increased by $25 million or 8.2% to $337 million for the third quarter, whilevolumes increased by close to 3 million pieces or 8.1% when compared with the same period in theprior year. Domestic parcels, the largest product category, continued to do well as revenueincreased by $21 million or 9.9%, and volumes grew by over 2 million pieces or 10.8% in the thirdquarter, compared to the same period last year.
The total parcels revenue of $337 million was composed of four product categories: domesticparcels ($237 million), outbound parcels ($48 million), inbound parcels ($48 million) and other ($4million).
In the first three quarters of 2014, parcels revenue increased by $79 million or 8.9%, andvolumes increased by 4 million pieces of 4.2% when compared to the same period in 2013. Fordomestic parcels, revenue increased by $56 million or 8.9% and volumes increased by over 5 millionpieces or 8.4% in the first three quarters of 2014, compared to the same period last year.
The company said revenue growth in the third quarter and first three quarters of 2014 reflectedthe strength of the fast-growing business-to-consumer e-commerce delivery market as customerscontinue to order more products online. The increase in revenue also reflects a change in theproduct mix, including the growth of tracked packet items introduced in 2013. In addition, a changein the mailing pattern of some large US customers has led to an increase in domestic parcel volumesand a decrease in inbound US volumes, Canada Post said.
The group’s Purolator business generated revenue from operations of $409 million in the thirdquarter – an increase of $16 million or 4.1% when compared to the same period last year. After thefirst three quarters of 2014, revenue totals $1.22 billion – an increase of 38 million or 3.7%compared to the same period in 2013. Increases in the third quarter and first three quarters of2014 were mainly due to improved yield.
Purolator contributed a net profit of $14 million for the third quarter, an improvement of $2million or 22.3% when compared to the same period in the prior year. For the first three quartersof 2014, Purolator earned a net profit of $25 million, an increase of $4 million or 22.7% whencompared to the previous year.
Total group revenues for Canada Post increased by 7.5% in the third quarter to $1.44 billion,with the business generating a profit before tax of $13 million in the third quarter compared to aloss before tax of $129 million in the same quarter of 2013. As they were in the second quarter,the results are mostly due to the impact of lower employee benefit costs, continued growth in theParcels business and new pricing measures for Transaction Mail contained in the Corporation’sFive-point Action Plan.
For the first three quarters of 2014, the Canada Post segment reported a profit before tax of$39 million compared to a loss before tax of $165 million for the same period in 2013 and isexpected to report a profit for 2014.
Volumes in Transaction Mail, Canada Post’s core business, nevertheless continued to fall asmailers and consumers turn to digital alternatives. Volume erosion picked up speed in the thirdquarter after being lower than expected in the second quarter. Compared to the same periods in2013, volumes decreased by 58 million pieces or 6.1% in the third quarter and by 175 million piecesor 5.1% in the first three quarters of 2014.
With the group’s parcels business showing strong growth already this year, Canada Post said itexpected a 20% jump in parcel volumes this holiday season – although that surge in activity willnot be enough to offset the ongoing and precipitous decline in letter mail. Parcel revenues of $337million compare with around $750 million in revenue generated by letter mail.
Meanwhile, research by FedEx into the Canadian e-retail market indicates that the majority ofCanadian consumers plan to shop online during this holiday season, with Western Canada showing thestrongest demand for online shopping during the upcoming Christmas period. The results of the thirdannual ‘FedEx Express Canada Online Shopping Intentions Survey’ showed that 61% of Canadians intendto buy their Christmas gifts online this year, up from 51% last year.
In British Columbia, for example, 68% of the consumers are expected to shop online this holidayseason, a 19% increase on last year. In Alberta, the figure is similarly high with 69%, which alsorepresents a double-digit increase of 13% compared to 2013. A majority of Canadian population alsoplan to make use of “click-buy-and-ship” options from anywhere due to its convenience andcomfort.
And research by UPS indicates that more than 30% of Canadians planned to shop with USe-retailers over Thanksgiving weekend, but many people still prefer to “buy Canadian”, eitheronline or offline.
UPS Canada’s annual ‘Black Friday survey’ revealed that over a third (32%) of Canadians intendto shop for Black Friday and Cyber Monday deals on US e-retail websites. This represents anincrease of 33%, up from 24% in 2013, and almost triples the 2011 figure when only 13% wanted toprofit from US online shopping deals.
However, the respondents claimed that the arrival of US retailers north of the Canadian borderhas not impacted on traditional cross-border shopping, with the number of Canadians travelling tothe USA for shopping expected to triple to 20% in 2014, compared to 6% in 2011.
The survey highlighted the increasing competition from Canadian retailers both online andin-store, with 26% of the respondents pointing to Canadian retailers now offering Black Fridaydeals. The US retailers still compete for their share of the Canadian market as some 44% of thoserespondents who are unlikely to make purchases from the USA prefer to shop online from domesticretailers.
The UPS survey found that when shopping online, Canadians consider post-purchase experience andshipping options including delivery dates and parcels visibility particularly important. Around 36%of the respondents value specific delivery times and 35% value text or e-mail alerts related to thestatus of their shipments, while same-day delivery and convenient pick-up locations are importantfor 29% and 25% respectively.
UPS expects to deliver 34 million parcels globally on its peak day, 22 December. Over the courseof December, the company forecasts a record volume of 585 million packages, an increase of 11% onthe previous year.
