With Canada Post on track to lose $1.5 billion in 2025 and contract discussions between the union and the corporation stalled, the federal government is embarking on a modernization plan it says will allow Canada Post to stabilize its finances and ensure its survival.
“The bottom line is this: Canada Post is effectively insolvent,” Government Transformation Minister Joël Lightbound said in a statement on Thursday.
“It provides an essential service to Canadians, and in particular to rural, remote and Indigenous communities, and Canadians are rightfully attached to it and want it saved. However, repeated bailouts from the federal government are not the solution.”
WATCH | Mininister wants ‘immediate’ action from Canada Post: 
Ottawa wants to see ‘immediate steps’ from Canada Post to address finances
Ottawa is recommending major changes for Canada Post in a bid to ‘stabilize’ the organization’s financial situation, including changes around letter mail frequency, residential delivery and rural post offices, says Transformation, Public Works and Procurement Minister Joël Lightbound.
Chief among those changes is allowing Canada Post to end home delivery and convert the remaining four million addresses that still receive it to community mailboxes. Lightbound said the process would take about nine years, with most of it expected to be completed in the first four.
Three-quarters of Canadians already get their mail from community mailboxes, a government official said in a background briefing Thursday, and moving the remaining Canadians to the communal system will save the corporation $400 million annually, a government statement said.
While home deliveries could be phased out, the corporation’s delivery accommodation program, which allows people with mobility issues to arrange for weekly home delivery or other accessibility options, will remain in effect, the government official said.
Lightbound said Canada Post will also now be able to adjust how it delivers mail, so that non-urgent post can can move by ground instead of air at a cost savings of $20 million annually.
The modernization plan also includes lifting the 1994 moratorium on closing rural post offices that covers nearly 4,000 locations — many of which the government says were once rural and have since become urban post offices.
The government official explained that lifting that moratorium is intended to reduce the number of locations in areas that are over-served, while maintaining rural, remote and Indigenous post offices in areas where they are needed.
The federal government is also reviewing the process for how it increases the price of stamps to make it more flexible and quicker.
WATCH | ‘There are limits to our capacity to bail out Canada Post’: 
‘There are limits to our capacity to bail out Canada Post year after year,’ minister says
When asked if this is officially the end of the federal government ‘bailing out’ Canada Post, Joël Lightbound, minister of government transformation, public works and procurement, said there will be instances the organization will need government cash injections — but he added that Canada Post needs to show a path of financial viability.
Lightbound says he has also asked Canada Post to look for other cost-saving measures and slim down its management structure.
“As our government reviews its balance sheets so we can spend less and invest more, we are asking Canada Post to do the same,” the minister said in a statement.
A government official said Canada Post has 45 days to examine the government’s recommendations and detail how it will proceed.
The Kaplan report
The changes announced Thursday are in line with recommendations made in the May 15, 2025, Industrial Inquiry Commission led by William Kaplan.
Kaplan’s report noted that in 2006, Canada Post delivered 5.5 billion letters a year, but by 2023 that volume had dropped to 2.2 billion, despite the number of addresses in Canada increasing by three million over the same period.
The report said Canada Post’s infrastructure and staff were designed to deliver 5.5 billion letters a year and the corporation “cannot be sustained with a volume of less than half that.”
‘Canada Post is effectively insolvent,’ Government Transformation Minister Joël Lightbound said Thursday. (Alex Lupul/CBC)
“There is every reason to believe — and no reason not to — that the letter mail decline will continue and that this trend is irreversible: not a levelling off, but almost certain and eventual extinction,” the report said.
Canada, Kaplan said, is not unique. He noted that the Universal Postal Union — the United Nations agency for the postal sector — has said the annual volume of domestic letters has fallen globally from 432 billion in 2000 to 196 billion in 2024.
Ongoing labour dispute
Negotiations for a new collective agreement have been ongoing for more than a year and a half. Earlier this month, the union said the government’s offer of a 13 per cent pay increase fell short of its demand for 19 per cent.
While the union said it was willing to work with Canada Post to allow weekend delivery and the addition of part-time workers, it said the corporation walked away from the negotiating table.
WATCH | Canada Post has 40 days to provide plan: 
Canada Post asked to provide cost reduction plan within 40 days, minister says
Joël Lightbound, minister of government transformation, public works and procurement, didn’t offer any details when asked about potential layoffs in the face of major changes at Canada Post, but said he has asked management to lay out a cost-saving plan that he will then review.
In an effort to get the corporation back to the table, the Canadian Union of Postal Workers (CUPW) said it would switch its job action from refusing to work overtime to refusing to deliver flyers.
The union says that mail carriers are not being paid properly for the delivery of flyers, which Simpson says is onerous.
Canada Post said that it has asked the union to deliver the flyers that are currently stuck in its network ahead of the restart of talks. It said the ban on flyer deliveries is affecting many customers, including community newspapers, small businesses and charities.
Last week, Canada Post said it was sending a new offer to the union in an effort to get negotiations moving again.
Pressure is mounting to reach a deal as the crucial holiday season approaches.
A strike and lockout lasted more than a month in November and December last year, ending only after then labour minister Steven MacKinnon declared an impasse in the talks and asked the Canada Industrial Relations Board to employees back to work.