Ongoing labor uncertainty causes business exodus to private carriers

Canada Post lost US$294 million before taxes in the second quarter, the largest loss for any three-month period in the company’s history, as parcel volumes plunged amid a prolonged contract dispute with mail carriers that has created uncertainty for business customers.

The Canadian postal operator on Tuesday said pre-tax loss in the first half was $323.7 million, with more than 50% of the loss occurring in June when members of the Canadian Union of Postal Workers stopped working overtime and the threat of a strike remained. On an operating basis, Canada Post lost $286 million in the second quarter, 44% more than last year for the period, and $366 million in the first half. 

Parcel revenue sank 36.7% in the quarter, or $208 million, on a decline of 25 million pieces (36.5%) as the labor uncertainty pushed shippers to private sector carriers for their deliveries. The decline in parcel volumes has steadily deteriorated since December, when the government intervened to end a 32-day strike and commission a study of Canada Post’s condition. Parcel volume in the first half fell 31% year over year, resulting in a 29.6% decline in parcel revenue. 

Overall revenue fell 7.3%, or $104.8 million, as improved volumes from regular mail due to one-time federal election mailings helped offset some of the parcel decline. 

In 2024, Canada Post recorded a $611 million loss — its seventh consecutive annual loss — nearly all of it in the second half. Since 2018, the national post has lost $3 billion, with cumulative losses from operations of $3.6 billion. 

Canada Post said revenue from direct marketing mail declined 7.5% compared to the second quarter of 2024 as companies sought to avoid the possibility of time-sensitive mailings getting trapped in the postal network in the event of a work stoppage.

Total operating costs declined nearly 1% in the second quarter versus the prior year as lower parcel volumes led to a decline in collection, processing and delivery costs. Labor costs increased despite two fewer paid days in the year, reduced management headcount and the overtime ban in late May. 

Status of contract negotiations 

CUPW mail carriers resoundingly rejected Canada Post’s final offer on Aug. 1 after the federal government intervened to conduct a vote over the objection of union leadership, which had not agreed to the terms. Collective bargaining was scheduled to resume earlier this month, but was postponed because federal mediators were busy trying to resolve a dispute between Air Canada and flight attendants that resulted in a three-day strike. Canada Post has canceled two meetings in the past week, including one scheduled for Monday, because it says it needs more time to review the union’s new counteroffer.

The sides remain far apart on how to modernize Canada Post’s delivery model as letter mail declines in the Internet age and shippers gravitate to alternative parcel carriers. It wants to implement part-time flex staffing, weekend delivery, the ability to level loads between carriers as needed and dynamic routing, rather than sticking to pre-determined assignments.

The Canadian Industrial Relations Board this year agreed with the state-owned company that rigid work rules under previous collective bargaining agreements have made it more difficult to implement efficiency measures.

Canada Post has offered a 13.6% pay hike over four years, with improved inflation adjustments.