News Analysis
The ongoing threat of another full-blown postal strike will lead to a decline in business for an already struggling Canada Post, as companies and individuals look for a delivery service that guarantees reliable timelines, business experts say.
The union representing more than 55,000 postal workers and Canada Post have been at odds for more than a year as the two sides attempt to hammer out a deal at the bargaining table to prevent another work stoppage similar to the 32-day strike that occurred during the hectic Christmas season last November and December.
The month-long strike by Canadian Union of Postal Workers (CUPW) members left millions of letters and parcels in limbo and a massive backlog to sort through when the work stoppage ended.
Last week, the union called for a nationwide suspension of overtime work following the expiration of two collective agreements that had been extended until May 22. But CUPW national president Jan Simpson has said postal workers could walk off the job if Canada Post changes their working conditions, suspends benefits, or begins layoffs.
The Canadian Federation of Independent Business estimates last year’s holiday-season strike resulted in $1.6 billion in losses for small businesses, and has left many business owners looking for alternative delivery services.
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A study conducted among CFIB members following the last strike found that 73 percent were already exploring ways to reduce their dependence on Canada Post, CFIB director of national affairs Christina Santini told The Epoch Times.
With the threat of another strike on the horizon, many more business owners are likely to follow suit, Santini said.
“It has affected their perception of how reliable Canada Post services can be,” she said. “I think many are looking to switch providers, which isn’t going to help Canada Post and its long term viability, and in their trying to regain the market share that they’ve lost over time.”
Canada Post said this week its parcel shipping volumes are down 50 percent from this time last year, as uncertainty about a work stoppage holds back orders.
Ian Lee, a former banker and a business professor at Carleton University, characterized the national postal service as a sinking ship that is quickly losing its passengers as they become aware of alternative services for their business.
“Canada Post going on strike and losing money hand over fist—these create conditions of uncertainty. Businesses hate uncertainty,“ Lee told The Epoch Times. ”I would argue that businesses would rather pay a higher price to get certainty than pay a cheaper price to get massive uncertainty.”
Delivery Concerns
Canada Post has long been seen as a more economical option for sending parcels compared to using private delivery services, particularly for smaller businesses that don’t have enough volume to negotiate a discount with such providers, the experts agreed.
But that may not always be the case, according to Lee.
The Crown corporation may be undercutting its competition on parcel delivery, but it is also losing money on each and every transaction, Lee noted. Given its dire financial status, it may not be able to offer lower prices in the long run, he said.
A recently-released federal report by Commissioner William Kaplan said Canada Post is “facing an existential crisis,” noting that it is “effectively insolvent, or bankrupt.” The postal service notched an $803 million operating loss in the first nine months of 2024, part of $3.8 billion in losses since 2018.
As a Crown corporation, all financial resources employed to run Canada Post originate from the government, which in turn is subsidized by taxpayers. That means Canadian taxpayers are “cross-subsidizing” the businesses that receive below-market pricing from Canada Post for parcel delivery, Lee said.
“Right away it raises a fairness question: Why are they being subsidized when we don’t subsidize the private couriers?” he said.
“Those businesses who are really dependent on Canada Post for those cheaper courier prices are going to have to re-examine their business model, because I don’t believe that Canada Post can continue offering a service that’s losing money. It’s not sustainable.”
But private delivery services alone may not always be able to meet parcel delivery demand, making Canada Post services essential, Retail Council of Canada President and CEO Diane J. Brisebois said.
“For small and independent retailers, particularly those in the e-commerce space, Canada Post is often the only affordable and reliable delivery option to reach customers across the country,” Brisebois said in an emailed statement.
“Alternative delivery providers are often not economical, and as the last disruption showed, they quickly reach capacity and cannot absorb the overflow.”
Santini agreed, adding that courier services also can’t pick up the slack in the delivery of letter mail. She noted that some businesses continue to send invoices and cheques in the mail as well as advertisements and coupons.
“For some small business owners, mail is still very much important,” she said. “Flyers, which is another line of business for Canada Post, is still very important.”
But Lee noted that traditional letter mail no longer constitutes as significant a part of Canada Post’s operations as it used to. Letter mail has decreased 65 percent between 2006 and 2023 as younger generations look to emails, texts, and messaging apps over more traditional communication methods.
The business world is also becoming largely digital. While businesses still need an option for parcel delivery, much of their remaining communications with customers can be done online, Lee said.
“Business people are smart across the country,” Lee said. “They can see what’s happening. And so I think that those businesses that haven’t already digitized … will rapidly convert to digital invoicing and digital statements and that process is going to accelerate because of the last strike, and possibly this strike.”
Rural Delivery
Canada Post has a host of operational and financial issues to iron out, but it should always remain an essential service even if it does change over time, Santini said.
A survey of CFIB members found that 92 percent want the government to deem rail ports, air transportation, and service deliveries such as Canada Post essential to ensure a fluid supply chain, she said.
It is particularly important for customers living in rural and remote communities, Santini noted. While major metropolitan areas have access to a range of alternative service providers for parcel delivery, that is not always the case for businesses and customers in less populated areas.
“Canada Post is generally the key player in those communities,” she said. “It’s not always easy for a small business owner to say, ‘Yes, I will switch.’ But I think many are considering how they can reduce their reliance and exposure to this risk that Canada Post has become.”
Lee agreed that Canada Post will remain a vital service for rural Canada where there are few, if any, courier options, but predicted the Crown agency would ultimately cease functioning as a private enterprise and transition into a government service.
“It will be very expensive, because the people [in rural areas] live few and far between,” he said. “I would not be surprised if they restructured the post office to run as a service of the government for the 10 to 14 percent of people in the country where they have no courier access.”
