Canada Post Faces Deeper Challenges in Wake of Strike
Canada Post Faces Uncertain Future After Month-Long Strike
Prime Minister Justin Trudeau voiced a stark warning last week as Canada Post’s strike stretched into its fourth week, highlighting growing concerns over the long-term viability of the service.
“It is endangering the long-term viability of Canada Post as a service that Canadians rely on,” Trudeau told reporters in Halifax on Dec. 9. He cautioned that a prolonged disruption during the busy Christmas season might push customers to permanently seek alternatives.
The strike, now set to end Tuesday following a labour board ruling, brought the daily delivery of millions of parcels to a halt. Small businesses and individuals pivoted quickly, relying on private carriers to get packages to their destinations. The temporary shift, however, could have long-lasting impacts on the Crown corporation’s already fragile business model.
Lost Customers, Lasting Effects
While some businesses may return to Canada Post for its competitive shipping rates, others could stick with regional couriers or companies like FedEx and UPS, said Ian Lee, a professor at Carleton University’s Sprott School of Business.
“Parcel companies will see this as an opportunity to gain customers. They may adjust pricing to stay competitive,” Lee explained, adding that Canada Post is unlikely to regain all of its lost business.
Canada Post’s share of the parcel market has already taken a steep hit, plummeting to 29 per cent in 2023 from 62 per cent before the COVID-19 pandemic. In that time, competitors like Amazon capitalized on the soaring demand for next-day deliveries, while Canada Post’s annual parcel shipments dropped by nearly a quarter.
At the same time, letter mail — once the backbone of Canada Post’s services — continues its decades-long decline. Canadian households now receive an average of two letters per week, compared to seven in 2006.
Back to Work, But Structural Issues Remain
With the strike poised to end, Labour Minister Steven MacKinnon ordered the federal labour board to ensure operations resume, extending existing contracts until May. MacKinnon also announced an industrial inquiry commission to investigate Canada Post’s structural challenges and propose solutions by mid-May.
Despite a temporary agreement that includes a five per cent wage increase, Canada Post’s financial future looks grim. The corporation reported an $845-million operating loss in 2023, and experts warn that, without drastic action, it could run out of cash by 2026.
A Necessary Shift in Strategy
Canada Post faces two potential paths: cost-cutting or revenue generation.
Cost-saving measures could include reducing delivery to every other day or expanding the use of community mailboxes, which streamline drop-offs. Lee also suggested franchising Canada Post outlets to retail chains like Shoppers Drug Mart, potentially saving $1.5 billion annually.
On the revenue side, experts see opportunities in last-mile delivery partnerships with e-commerce giants or offering expanded government services. Other countries, such as France and Slovenia, have integrated postal banking, allowing post offices to provide basic financial services in rural areas underserved by banks.
The Canadian Union of Postal Workers has pushed for postal banking, arguing that many of the country’s 5,800 post offices operate in communities without banks. Canada Post itself has called for reform to rules preventing the closure of post offices in areas that were rural decades ago but have since become suburban hubs with more service options.
Faith in the Institution at Risk
Ultimately, the strike has underscored a deeper issue: waning public confidence in Canada Post.
For younger generations, the shift to digital communications and e-commerce means less reliance on traditional mail. “Students I teach don’t believe any institution has the inherent right to stand forever,” said Lee.
As Canada Post struggles to adapt, its future may hinge on its ability to innovate, streamline operations, and prove its relevance in a fast-changing economy.
