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<\/p>\nBy Isaac Phan Nay, Local Journalism Initiative Reporter<\/p>\n
Is Canada Post doomed, a victim of tech changes and new competition that have made daily mail delivery irrelevant? Or has the 174-year-old institution been strangled by government policies that limited its chance to compete and block new ways of growing revenue?<\/p>\n
The federal government asked William Kaplan to answer those questions last year after a strike by 55,000 Canada Post workers halted parcels and letter delivery across the country.<\/p>\n
Last May, he delivered the \u201cKaplan report,\u201d which said Canada Post was effectively insolvent and needed to drastically change services to survive.<\/p>\n
Kaplan\u2019s review found that the union\u2019s proposals to increase Canada Post revenues by expanding into new areas like banking were unrealistic. Instead his recommendations included ending door-to-door home mail delivery, letting the corporation close post offices and making use of flexible part-time workers.<\/p>\n
The Canadian Union of Postal Workers, or CUPW, staunchly opposes Kaplan\u2019s recommendations. When the federal government let Canada Post implement some of the service cuts last month, workers walked off the job a second time before starting rotating strikes Saturday.<\/p>\n
The tension highlights the postal service\u2019s existential crisis.<\/p>\n
While the union is fighting hard to protect its members\u2019 jobs, Canada Post says it\u2019s bankrupt and needs to drastically change its services as demand for letter mail and parcel delivery plummet.<\/p>\n
<\/p>\n
Issac Phan Nay for the Tyee \u2013 Source: Canada Post<\/p>\n
But CUPW alleges Canada Post is crying wolf and using the labour instability to push business over to Purolator, a private courier 91 per cent owned by Canada Post.<\/p>\n
\u201cManagement is being deceptive about parcel volumes and the share of the parcel market they claim to have lost,\u201d the union said in a press release last week.<\/p>\n
\u201cThe government\u2019s interventions have only emboldened the employer and undermined free and fair collective bargaining.\u201d<\/p>\n
It\u2019s calling for Canada Post to come to the table with a better offer for members.<\/p>\n
The case for service cuts
Canada Post says it\u2019s seen significant losses over the past seven years. In 2024, for example, Canada Post had $6.1 billion in revenue and $446 million in net investing income. The same year, it spent $7.4 billion, leaving a loss before tax of $841 million.<\/p>\n
Canada Post spokesperson Lisa Liu said in an email that its mandate is to deliver items to all Canadians while remaining financially stable. But with less to deliver and more addresses to serve each year, revenues are declining while costs are rising.<\/p>\n
Labour and benefits accounted for 65 per cent of spending, according to Canada Post\u2019s annual financial report. It attributed its losses primarily to declining demand for parcel and letter mail and labour instability.<\/p>\n
\u201cWe need to fix our core delivery service so that we can reduce costs and grow revenues,\u201d Liu said. \u201cThat has been our focus throughout negotiations, such as our proposals to add weekend parcel delivery.\u201d<\/p>\n
The Kaplan report lays out a path forward for Canada Post.<\/p>\n
In the report, Kaplan attributed the problem to plummeting demand for letter mail and collective agreement rules that stop Canada Post from hiring part-time, flexible workers \u2014 measures the union has previously said would mean shifting full-time jobs into more precarious gig work.<\/p>\n
He also said the crisis is partly due to government measures like the 1994 moratorium that prevented the corporation from closing locations in rural areas, a measure intended to ensure all Canadians could access service.<\/p>\n
Letter demand is falling across the world, not just in Canada, Kaplan said in the report. In 2006, Canada Post delivered approximately 372 letters to each Canadian household. By last year that number had dropped to 113.<\/p>\n
\u201cThere is every reason to believe \u2014 and no reason not to \u2014 that the letter mail decline will continue and that this trend is irreversible: not a levelling off, but almost certain and eventual extinction,\u201d Kaplan said in the report.<\/p>\n
Kaplan\u2019s report says Canada Post\u2019s opportunity lies in the parcel market.<\/p>\n
But competition is stiff. Businesses are quickly turning to private couriers to ship parcels across Canada. In 2019, Canada Post delivered 62 per cent of Canada\u2019s parcel market, according to the Kaplan report. By 2023, the postal service delivered only 29 per cent.<\/p>\n
Kaplan notes the parcel market is \u201ccompletely deregulated\u201d and has no real barriers to entry, letting competitors provide quick, reliable and cheap parcel service.<\/p>\n
While Canada Post is closed on weekends, Quebec-founded parcel service Intelcom offers delivery from 8 a.m. until 9 p.m. seven days a week, and its drop-off locations never close.<\/p>\n
\u201c[Competitors] can charge what they want \u2014 subject to fiercely competitive market forces \u2014 and deliver where they choose,\u201d Kaplan said. \u201cCanada Post\u2019s competitors want it all, and they are not standing still.\u201d<\/p>\n
Meanwhile, competitors like Amazon \u2014 notorious for its anti-union stance and proud of its use of flexible part-time workers \u2014 can aggressively chase new technologies, like delivery drones, Kaplan writes.<\/p>\n
\u201cThe Government of Canada, Canada Post, and CUPW must blaze a new trail,\u201d Kaplan writes. \u201cThis will not be easy.\u201d<\/p>\n
Kaplan\u2019s solution? To admit that letter mail is going extinct and let the service expand to seven-day-a-week parcel service to compete with its privatized rivals.<\/p>\n
Ian Lee, a business professor at Carleton University in Ottawa, said Kaplan\u2019s recommendations address a reality that has been obvious for years.<\/p>\n
Lee, who wrote a thesis about the corporation for a PhD in public policy, said Canada Post needs to focus on parcel delivery if it wants to survive.<\/p>\n
\u201cEither they\u2019re going to make it in parcels or they\u2019re going to die, because letter mail is going to vanish,\u201d Lee said.<\/p>\n
Lee said that where delivery is profitable in the big cities, it\u2019s already too late for Canada Post to compete with private couriers like Amazon or FedEx.<\/p>\n
Instead, he recommends the business massively scale down to focus on parcel delivery to rural areas that private couriers don\u2019t cover.<\/p>\n
\u201cPeople are still going to continue to live there,\u201d he said. \u201cThey\u2019re going to demand that they be looked after. So I think what will happen is the post office could reinvent itself as the organization that services this niche of Canadians.\u201d<\/p>\n
However the organization pivots, Lee said, declining letter and parcel volumes mean that Canada Post will not be able to support 60,000 employees. Lee said the company will likely have to \u201cradically\u201d downsize and cut down on its biggest spending if it wants to stay afloat.<\/p>\n
\u201cIt\u2019s not sustainable to maintain 55,000 people because the demand has collapsed,\u201d he said. \u201cThey\u2019re bleeding to death on the sidewalk and you got to stop the bleeding.\u201d<\/p>\n
He estimates that Canada Post could sustainably employ up to 20,000 employees. That\u2019s still more than Fedex or UPS, which employ 13,000 workers in Canada each, or DHL, which has 2,700.<\/p>\n
But the union says there are other ways to save Canada Post.<\/p>\n
Kate Holowatiuk, president of CUPW Local 850 in Victoria, said the Kaplan report was based on a small amount of data from Canada Post and didn\u2019t consult enough with CUPW.<\/p>\n
\u201cIt\u2019s biased and just based on such a little, such little amount of input,\u201d she said.<\/p>\n
The case to expand business
The union has suggested Canada Post protect jobs by upping stamp prices and expanding its services. Several ideas include expanding into grocery delivery and creating artisanal markets at postal stations.<\/p>\n
The Kaplan commission didn\u2019t support the union\u2019s propositions. Kaplan dismissed grocery delivery and artisan markets as non-credible solutions, where Canada Post could once again be outcompeted.<\/p>\n
App-based gig workers already deliver groceries through Uber Eats and Instacart, for example.<\/p>\n
But Holowatiuk said Kaplan\u2019s reasons for dismissing the ideas weren\u2019t convincing.<\/p>\n
\u201cWe meet with other postal union representatives across the world; we didn\u2019t just make up all of these ideas,\u201d she said. \u201cWe look to see how have they been able to protect jobs and your end services for your communities.\u201d<\/p>\n
The union has also proposed Canada Post expand into public banking to increase its revenue, like postal services have done in Switzerland, New Zealand and France.<\/p>\n
Postal banking services abroad have earned billion-dollar profits.<\/p>\n
Poste Italiane in Italy, for example, offers banking, investment and asset management services through its banking system, BancoPosta. It\u2019s captured a share of the same market that includes the oldest bank in the world, Banca Monte dei Paschi di Siena.<\/p>\n
According to its website, Poste Italiane\u2019s financial services alone bring in approximately C$8 billion in revenue annually.<\/p>\n
La Banque Postale in France, meanwhile, has posted more than $1 billion in revenue so far this year.<\/p>\n
Canada Post is experimenting with financial services. In March, the corporation launched MyMoney Account, a new spending and savings account to be run in partnership with Vancouver-born financial technology startup Koho.<\/p>\n
But critics are skeptical that financial services could generate enough profit to make up for the corporation\u2019s losses.<\/p>\n
A federal government-appointed task force looked into four approaches to postal banking in 2016.<\/p>\n
It considered business models including developing low-cost banking products that would provide a lower-cost alternative to payday loans, or partnering with up to five financial institutions to provide a low-cost extension to the existing branch network in places where having a bank is less profitable.<\/p>\n
Canada Post\u2019s Liu said only the option of partnering with three to five banks would be a viable opportunity.<\/p>\n
Still, Liu said it would be \u201conly marginally profitable with high investment risk, including the assumption that banks or credit unions would agree to partner with Canada Post.\u201d<\/p>\n
\u201cOur focus is to fix our core business \u2014 to deliver items to all Canadians,\u201d she said.<\/p>\n
Carleton University\u2019s Lee said that while postal banking has been profitable abroad, Canada Post does not have the resources or money to invest in banking infrastructure, or in training or hiring people to be bankers.<\/p>\n
\u201cThe idea that Canada Post can go into banking is just truly delusional,\u201d he said. \u201cI\u2019m not saying it to slam [CUPW]. I\u2019m just saying they don\u2019t understand banking.\u201d<\/p>\n
The Purolator controversy
The union also claims that Canada Post is chasing away its own business to boost Purolator\u2019s profits \u2014 allegations Canada Post categorically denies.<\/p>\n
Still, the union took its picket line to Purolator locations in late September.<\/p>\n
\u201cWe believe that management has also been using Purolator to run Canada Post into the ground,\u201d the union said in an Oct. 9 press release. \u201cBy sending product to its subsidiary while postal workers are in a legal strike position, Canada Post is doing an end run around the new anti-scab laws.\u201d<\/p>\n
Canada Post\u2019s Liu said the strike action has resulted in uncertainty, so customers are avoiding Canada Post in favour of other services of their own accord.<\/p>\n
\u201cCanada Post\u2019s parcel volumes have dropped due to uncertainty as customers make their own decisions and have chosen other carriers,\u201d Liu said. \u201cThe claim that the company is purposely being undermined is completely false and has no basis in fact.\u201d<\/p>\n
The first time Canada Post went on strike in November 2024, Purolator announced it was ready to take on extra parcels because of the labour action.<\/p>\n
\u201cPurolator is open for business,\u201d senior vice-president Chris Spanjaard said in a November press release. \u201cOur network is well prepared and ready to deliver continued success for our customers, and all Canadians, including those who have been impacted by the recent Canada Post labour disruption.\u201d<\/p>\n
Canada Post is the majority owner of Purolator, and Canada Post president and CEO Doug Ettinger sits on Purolator\u2019s board of directors.<\/p>\n
Andr\u00e9 Hudon sits on that board and also chairs Canada Post\u2019s own board of directors.<\/p>\n
And the union has highlighted that Purolator has seen parcel volumes increase while Canada Post sees losses every year.<\/p>\n
Canada Post reported Purolator had profits before tax of $293 million in 2023 and $294 million last year.<\/p>\n
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<\/p>\n
Issac Phan Nay for the Tyee \u2013 Source: Canada Post<\/p>\n
Liu added Canada Post cannot make money while the union is on strike. On Oct. 11, the union switched from full labour stoppage to rotating strikes.<\/p>\n
The end of Canada Post?
It\u2019s not clear how much longer Canada Post can survive. Kaplan writes that without the $1 billion bailout the federal government gave the corporation in January, Canada Post would have been unable to meet its current financial obligations.<\/p>\n
Canada would not be the only country without a public postal service. The United Kingdom and Germany have already fully privatized their postal operations.<\/p>\n
In March, Denmark announced its postal service would stop delivering letters, citing years of financial struggles and a 90 per cent decline in letter volumes since 2000.<\/p>\n
Kaplan nodded to the situation in Denmark in his report as \u201ca cautionary tale that one ignores at their peril.\u201d<\/p>\n
\u201cWithout an efficiency overhaul, Canada Post will be unable to retain, much less grow, its share of the parcel delivery market,\u201d he said. \u201cCUPW should bring to bear all the skill and smarts it has repeatedly demonstrated through its storied history in working to evolve the post office.\u201d<\/p>\n
Lee said much of Canada might not even need a postal service. He said the majority of letter mail, like health, tax and legal documents, can be digitized, while physical products like identification and banking cards can be sent through private couriers.<\/p>\n
Still, Lee said, in some rural and remote areas where Canada Post is the only delivery service, the service is still essential.<\/p>\n
\u201cCanada Post\u2019s only future is in parcels to rural, remote parts of Canada where there is no private alternative,\u201d Lee said. \u201cIf they were to survive at all, that\u2019s their niche.\u201d<\/p>\n
But for now, it\u2019s still up to the union and Canada Post to find a way forward.<\/p>\n
CUPW\u2019s Holowatiuk said the labour negotiations were not the place to decide the future of Canada Post. She said if Canada Post planned to follow Kaplan\u2019s recommendations, it would need to change its mandate.<\/p>\n
The federal government is scheduled to start a review of Canada Post\u2019s mandate this month. Holowatiuk urged it to consider feedback from rural and Indigenous communities who rely on the postal service.<\/p>\n
She added the members are determined to protect their jobs and are still looking for a better offer from Canada Post.<\/p>\n
\u201cWe\u2019re being strong-armed into submission here, and we\u2019re certainly not going to back down,\u201d Holowatiuk said.<\/p>\n
Last week, Minister of Jobs and Families Patty Hajdu told The Tyee the two sides would have to come to a deal together.<\/p>\n
\u201cThey have in many cases relied on the government to resolve these issues for them,\u201d she said. \u201cBut now we are at sort of a crossroads, and I think they both need each other.\u201d<\/p>\n
This article first appeared in The Tyee.<\/p>\n","protected":false},"excerpt":{"rendered":"By Isaac Phan Nay, Local Journalism Initiative Reporter Is Canada Post doomed, a victim of tech changes and…\n","protected":false},"author":2,"featured_media":240806,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[971,49,48,1848,75230,42775,44,113384],"class_list":["post-240805","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-amazon","tag-ca","tag-canada","tag-canada-post","tag-canadian-union-of-postal-workers","tag-cupw","tag-news","tag-purolator"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/240805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=240805"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/240805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/240806"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=240805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=240805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=240805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}