Canada Post’s Financial Crisis Amid Strikes and Changing Market Dynamics

By Frank Cianciullo and Martin Sarch

The strike has created significant disruptions for consumers and businesses. The labour strike also comes when Canada Post struggles to stay competitive in a rapidly evolving market. ?

The timing of the CUPW strike, coinciding with Canada Post’s financial crisis, has drawn attention to the difficult balancing act between meeting employee demands and ensuring the company’s sustainability. The union, representing 60,000 workers, pushes for significant financial adjustments in ongoing collective agreement negotiations. However, prolonged labour disruptions will drive more businesses and consumers away from the service, worsening the corporation’s already tenuous position.

The Crown corporation recently revealed an enormous pre-tax loss of $748 million for 2023, with cumulative losses of $3 billion since 2018. The strike has exacerbated the company’s challenges, as it faces the dual burden of operational disruptions and a shrinking customer base, with many of these customers never returning.

Small businesses, particularly those in remote areas, rely on Canada Post to send products, while consumers need more time to receive essential items like medications. The strike has also fueled public frustration, as many question the relevance of the national mail service in an age dominated by digital communications and private couriers.

Rural and remote areas of Canada rely on Canada Post to deliver products and food. Deliveries to these regions are often expensive, and for many residents, Canada Post is their primary source for receiving goods. Everything purchased in the North tends to be costly, and without reliable postal services, the well-being of these communities is at risk. Unfortunately, the government has long ignored this issue, hoping it will resolve itself. However, addressing this problem will require a comprehensive government plan.

Struggles To Stay Competitive in a Rapidly Evolving Market

Canada Post has been struggling to remain competitive in a rapidly evolving market. Urban Canada, where most of Canada Post’s revenue comes from, is filled with competition, and Canada Post is ill-equipped to handle it. The root causes:

·???????? Continuing decline in letters;

·???????? Extensive competition from private delivery companies, which operate on low-cost labour; models and offer more flexible services, such as evening and weekend deliveries;

·???????? Plummeting e-commerce parcel volume;

·???????? Outdated technology that does not give customers the level of experience that they want and that they can get elsewhere; and

·???????? Questionable business decisions such as selling key assets, including its IT and logistics departments, to stave off insolvency while implementing proposed stamp price increases.

Since reaching their peak in 2006, letter mail volumes have declined, with the corporation delivering fewer than 2.2 billion letters in 2023. Additionally, many businesses have shifted to email for invoicing and statements, decreasing the demand for traditional mail services. Any service issues will only make matters worse. As a result of these trends, the company is facing reduced revenues, even though parcel delivery volumes are on the rise.

Despite investments in upgraded facilities and enhanced customer service, Canada Post’s e-commerce market share has plummeted from 62% in 2019 to 29%. Rising operational costs, driven by adding 200,000 new delivery addresses annually, have only deepened the financial strain.

Canada Post’s outdated tracking system has become a significant source of customer frustration, negatively impacting its reputation in a highly competitive market. Unlike private courier services that offer near real-time tracking and detailed updates at every delivery stage, Canada Post’s system often leaves significant information gaps, and many international Posts have the same issue.. Delays in scanning packages and limited transparency regarding delivery timelines make it difficult for businesses and consumers to rely on the service, especially for time-sensitive shipments. This lack of accuracy undermines customer confidence and highlights the urgent need for modernization to compete effectively in today’s fast-paced logistics environment.

Canada Post has sold key assets, including its IT and logistics departments, to help delay insolvency, and the Post Office is planning to raise stamp prices. These measures are minor. Significant structural changes to delivery, retail, and operations are necessary. However, the government needs to resolve this issue more thoroughly before implementing such changes.

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Where do we go from here?

Experts argue that a complete overhaul of its operating model is required to reverse its downward trajectory. In the long run, there is little hope for the corporation without significant labour changes involving staff reductions, post office closures in urban areas, delivery changes, and systems people can rely on.

The need for Canada Post is debatable in Urban Canada, as many options exist.

The real need lies in rural and remote areas, where options for services are limited and often costly, including those offered by Canada Post. At some point, the government must determine the next steps, as both government and private businesses continue to withdraw from these regions, leaving Canada Post as the only remaining government entity. However, government departments have yet to respond to ensure that their services through Canada Post are maintained. The fundamental issue is that no one is willing to pay for these services.

The government has long overlooked the difficulties faced by Canada Post, which often serves as the sole representation in rural Canada. There was hope that a solution could be found without leading to a crisis, but significant change is always challenging.

Canada Post can secure a brighter future with urgent intervention and a strategic shift. Its struggles highlight the larger issues of adapting to a digital-first world, where consumers demand convenience, speed, and affordability. If the strike continues, the national mail carrier risks further alienating its remaining customer base, raising concerns about its long-term viability.

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