MONTREAL — Last week, Justin Trudeau said out loud what many were wondering as the postal strike dragged into its fourth week.
“It is endangering the long-term viability of Canada Post as a service that Canadians rely on,” the prime minister said.
Speaking to reporters in Halifax on Dec. 9, Trudeau warned that the country could “go through a complete Christmas season and everyone figures out alternatives” to the national mail service.
In effect, the strike may have pushed some customers away for good, leaving the cash-strapped Crown corporation in even worse shape and forcing a big shift in strategy.
Set to end on Tuesday after a ministerial directive and resultant labour board ruling, the month-long work stoppage saw the daily shipment of millions of items lurch to a halt.
It prompted tens of thousands of small businesses and individuals to turn to private carriers for delivery of their packages.
Lost customers
Many companies will likely return to Canada Post due to its low shipping rates, but others who find efficient alternatives in regional couriers may never come back, said Ian Lee, an associate professor at Carleton University’s Sprott School of Business.
“Those parcel companies will see this as an opportunity to gain new customers. They may shave their pricing down a little bit to try to be a little bit more competitive,” he said, citing carriers ranging from FedEx and UPS to upstart electric bike couriers.
“Canada Post is going to lose business.”
It already has. According to last year’s annual report, the postal service’s share of the parcel market has plummeted to 29 per cent from 62 per cent before the COVID-19 pandemic, as Amazon and other competitors seized on skyrocketing demand for next-day doorstep deliveries.
While the market for package delivery has ballooned in recent years, Canada Post’s shipments have shrunk — by nearly a quarter since 2020 to 296 million parcels in 2023.
Demand for letter mail may also wither. Last year, the average household received two letters per week, down from seven per week in 2006.
The postal shutdown will only hasten a decades-long migration online for old-fashioned mailbox fodder ranging from Christmas cards to cheques and invoices, Lee said.
“This is going to accelerate the digitization of everything. Businesses will say, ‘Gee whiz, I don’t want to get stuck like that again,’” he said. “Canada Post will lose more customers.”
Contract extension
Nonetheless, mail is poised to start moving again on Tuesday after Labour Minister Steven MacKinnon directed the federal labour board to order employees back to work if the tribunal determined a deal wasn’t reachable by year’s end.
The minister posted on X Monday that the board had declared an impasse and therefore a resumption of operations, with existing contracts extended until May to allow the bargaining process to resume.
In the meantime, MacKinnon said he will appoint an industrial inquiry commission to look into the “structural issues of the conflict” and come up with recommendations by May 15 on how a new agreement can be secured.
"The inquiry will have a broad scope, as it will examine the entire structure of Canada Post from both a customer and business model standpoint, considering the challenging business environment now facing Canada Post," he said Friday.
Canada Post and the union have agreed to implement a five per cent wage increase, retroactive to the day after the collective agreements expired.
At the moment, that business model is a flimsy one.
Canada Post notched an $845-million operating loss last year. If wages rise — the union initially asked for a 24 per cent cumulative pay bump over four years — no layoffs occur and revenue continues to slide, it will face potential financial collapse.
“They could be out of cash by the end of 2025 or midway through 2026,” said Ryder.
Paths forward
Hence the need for a pivot, with cost-cutting as one solution.
A first step could be to switch to mail delivery every other day, said Lee. But massive layoffs might follow; nearly 23,000 mail carriers worked at the Crown corporation as of 2022.
Lee also recommended franchising Canada Post locations to retail chains for savings he pegged at $1.5 billion annually.
“It's a traffic builder, it brings customers into their store … the Loblaws, the Shoppers, the corner stores.”
Another option is to adopt more community mailboxes — clusters of mail slots on the sidewalk that make drop-offs much quicker — for the 2.2 billion letters delivered annually.
In 2018, the Trudeau government scrapped a program launched by Stephen Harper's Conservatives to end much door-to-door mail delivery after public backlash.
The roughly 840,000 households that had already converted to community mailboxes since 2014 did not get the service back.
Revenue generation marks the other path to viability.
Elbowing into adjacent areas such as food delivery or partnering with e-commerce companies and rivals like UPS on last-mile package shipments present possible opportunities that could build on Canada Post’s vast network of employees and outposts.
“They’d be capitalizing on the fact that nobody else wants to do the last mile. They're turning that liability, if you will, into a competitive advantage,” said Lee.
More possibilities
Others have suggested government services, such as passport renewal, or banking — like the postal service in France and the Czech Republic — given the disappearance of bank branches from small towns.
Roughly 600 “points of service” from the federal government dot the country, including more than 300 Service Canada centres and some 25 passport offices. That compares to 5,800 Canada Post offices, including in rural communities devoid of other government sites.
Across the Atlantic Ocean, states from Spain to Slovenia assign postal workers to carry out customer transactions — withdrawals and deposits, for example — on behalf of banks.
“Rather than shutting down your branch in that town, why don't you move your banking activities into our post office and we can offer both,” Ryder said, stressing the idea of a commercial partnership.
The Canadian Union of Postal Workers has called for postal banking, saying some 2,000 communities host post offices but no banks.
Canada Post itself has proposed maintaining its presence in far-flung communities while reforming rules from 1994 that banned the closure of nearly 3,600 post offices in areas that were then rural but have since been swallowed up by urban sprawl.
“Today, these requirements apply to many communities that were once rural, but are now clearly suburban with more service options nearby,” the Crown corporation said in its latest annual report, suggesting consolidation in those areas.
As for the issue of faith in the institution itself addressed by the prime minister, Ryder said the next generation offered a sobering view of the ailing body.
“I still mail Christmas cards,” he said. “But there would be lots of other people who would say, ‘Hey, I didn’t send Christmas cards this year and guess what, the world didn’t fall apart.
“The students I teach in university don’t believe that any institution has an inherent right to stand forever,” he added.
“There is no love lost for Canada Post.”
This report by The Canadian Press was first published Dec. 16, 2024.
Christopher Reynolds, The Canadian Press
