Small businesses and other shippers that use Canada Post for last-mile delivery of e-commerce orders will face disruptions after mail carriers went on strike Thursday and the postal operator could face permanent damage if some of them stick with alternative courier services once there is a resolution.
Mail carriers, who have been locked in bitter contract talks for 20 months, immediately went on strike Thursday after learning about the government’s restructuring plan for Canada Post that likely will result in major job losses. The work stoppage shuts off regular mail and parcel delivery as the busy holiday shopping season approaches.
“The impact on small businesses will be massive. Last year’s strike alone cost small firms over CA$1 billion (equivalent to US$719 million). Doing this in the lead-up to the critical holiday retail shipping season is especially troubling,” said Dan Kelly, president of the Canadian Federation of Independent Business, in a statement. “Still, the federal government must push forward with the needed changes ordered today. Now is not the time to turn back.”
Aaron Rubin, founder and CEO of ShipHero, a provider of warehouse management systems tailored for direct-to-consumer retailers, said on LinkedIn, “Just shut down Canada Post at this point. Shippers aren’t going to use them anymore.”
The Liberal government instructed Canada Post to end home delivery and switch to community mailboxes, reduce delivery frequency to two or three days per week, and close some post offices to rightsize operations amid falling letter and parcel volumes, and stabilize finances.
In response to the service cutbacks, the Canadian Union of Postal Workers in the afternoon launched a national strike.
“This announcement was an outrage. Minister Lightbound gave the union no indication that he was going to do this when leadership met with him last week. … This slapdash approach without full public consultation is an insult to the public and to postal workers. The government may act as the sole shareholder, but the public owns the post office,” said CUPW National President Jan Simpson in a statement. “We cannot accept this attack on good jobs and public services.”
Joël Lightbound is the minister of government transformation, public works and procurement.
Rubin called the union’s decision to strike without warning “irresponsible” and noted that packages in the Canada Post system, some of which are time sensitive medications, will be indefinitely stranded.
Canada Post said all mail and parcels in the postal network will be secured and delivered as quickly as possible once operations resume. “However, a national strike of any length will impact service to Canadians and businesses well after the strike activity ends. Processing and delivery may take some time to fully return to normal.”
The two sides agreed to continue the delivery of government social security and welfare checks during the labor disruption and will ensure existing live animal shipments are delivered to their final destination.
Reaching the tipping point
Uncertainty from on-and-off-again strike actions and threats has exacerbated Canada Post’s volume and financial losses this year. Canada Post posted a US$294 million pre-tax loss for the second quarter — the largest quarterly loss in its history — and a 36.5% drop in parcel volume year over year. The postal operator hasn’t turned a profit since 2017.
Collective bargaining has stalled over a number of issues, including changes to operations and work conditions Canada Post says are necessary to turn around losses. The national post, for example, wants to introduce a part-time workforce for weekend delivery, part-time flex positions, flexible rather than fixed carrier routes and other measures. The union says the government’s offer of a 13% pay increase falls short of its demand for a 19% increase.
CUPW went on strike for 32 days late last year before the government intervened. In May, the union banned overtime work and then switched this month to a ban on delivering bulk marketing mail in an effort to pressure the company to make concessions.
Nearly two-thirds of businesses (63%) could walk away from Canada Post in the event of a strike, according to a July survey from the Canadian Federation of Independent Business. Thirteen percent of small businesses permanently dropped Canada Post as a carrier following the 2024 strike.
According to CFIB research, four in five businesses still use Canada Post for sending checks and other letter mail, but 73% use private carriers for package delivery. Over half (58%) like to use Canada Post for its low cost and convenience, while reliability and customer service ranked much lower as priorities.
Kelly blamed the previous government of Justin Trudeau for a decade of inaction on proposals to give Canada Post the flexibility to overhaul its operations and reduce costs.
“Small firms are still strong users of Canada Post, and a new business model can be quickly implemented if the government gives the corporation the labor market protection it needs to get the job done. Canada needs some form of temporary, or permanent, essential services legislation to ensure service continues while the reforms are going into effect. Small firms are counting on the government and all political parties to make this happen,” he said.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at [email protected].
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