OTTAWA, Ont. – Canada Post lost $66 million before taxes in the first quarter of the year, with a growth in parcels and volumes unable to offset increased costs as well as drops in transaction mail and direct marketing.

The $1.7 billion in revenue was up 2.1% compared to the first quarter of 2019, but the $1.7 billion in operating costs was up 7.3% over the same period. Higher labor and employee benefit costs compounded the higher parcel-related collection, processing and delivery costs.

Parcels require more technology, processing space, and time interacting with customers, Canada’s national postal service explained. And while the mail business declined, the number of addresses receiving daily mail and parcel service continued to grow.

By mid-March, parcel volumes were rapidly increasing while transaction mail and direct marketing volumes decreased.

“Covid-19 is expected to have a larger impact on the business in the second quarter,” it says in a related press release.

Compared to the same quarter in 2019, parcel volumes were up 6.1% — an additional 4 million pieces – and parcel-related revenue was up 10.4% to $53 million.

While the growth rate for parcels was higher than the same period in 2019, it was lower than the growth rate in the first quarter of 2018.

“The Canadian e-commerce delivery market is highly competitive and some online retailers continued to diversify their shipping partners,” Canada Post says.

The news comes days after Canada Post reported a before-tax loss of $153 million for 2019, although the number of addresses receiving daily mail and parcels climbed by 168,000.

Its Purolator business segment recorded a before-tax profit of $10 million in the first quarter of 2020, down $2 million from the same period last year. It had recorded a $152 million pre-tax profit in 2019, down 5.2% from the year before.

The Canada Post Group of Companies also includes SCI Group, its 3PL logistics and supply chain services, and Innovapost.