Labor uncertainty continues to weigh down postal operator

Canada Post and the union representing some 50,000 mail carriers returned to the bargaining table last week and immediately failed to make any progress, accusing each other of unrealistic expectations as the postal system bleeds parcel volumes and red ink. The impasse is raising the risk for businesses that depend on reliable parcel delivery during the busy holiday shipping peak season. 

Contract talks resumed on Wednesday between Canada Post and the Canadian Union of Postal Workers for the first time since late May, when the company made its “final” offer. Since then, CUPW has enforced a ban on overtime work, opposed binding federal arbitration, and union members overwhelmingly rejected Canada Post’s proposal on Aug. 1 after the government stepped in to force a vote.

“It’s very concerning they still have not reached an agreement with another peak season around the corner,” Alison Layfield, director of product development at cross-border package consolidator ePost Global.

Canada Post said the union’s counter offer doesn’t address the structural challenges and operational fixes, including the hiring of part-time workers, required to address a secular decline in letter mail and competition from private parcel carriers.

“Unfortunately, CUPW has either maintained or hardened its position on many items and added new demands, and the gap between the parties remains substantial. Several proposed items would increase the corporation’s operational costs. While the union’s offers included some part-time employee components to address weekend delivery, CUPW’s proposed approach remains unaffordable, problematic and complex to manage,” Canada Post said in a statement.

CUPW shot back on Thursday. “Canada Post has shown us once again that it is not serious about bargaining in good faith,” the union said, adding that the company hasn’t budged from its May offer or provided “a meaningful response” to its counter proposals.

“Instead, Canada Post demands concessions from postal workers, while ignoring solutions CUPW has put forward that would address service needs, improve working conditions, and secure the future of the postal service for the public,” the CUPW statement said. “Postal workers have been clear: we are not here to make concessions that erode jobs, rights, or the public service.”

The standoff continues to undermine Canada Post’s finances and service levels. On Tuesday, Canada Post posted a US$294 million pre-tax loss for the second quarter —  the largest quarterly loss in its history — and a 36.5% drop in parcel volume year over year. The postal operator said ongoing labor uncertainty following a 32-day strike late last year has pushed business customers, worried about the decline in reliability and having shipments trapped in the system in the event of another work stoppage, to alternative delivery companies. Direct marketing mail was also down 7.5%.

Canada Post has not turned a profit since 2017, with seven consecutive years of losses totaling $3 billion.

Canada Post says it needs a flexible business model to compete in the new environment. That includes basing delivery routes on parcel volumes for each day; the ability to offer weekend, evening and next-day delivery services at affordable rates; and a lighter regulatory hand so it has more autonomy to adapt quickly to the growing e-commerce market.

It has proposed a weekend delivery model using a dedicated part-time workforce as well as dynamic routing, which would allow it to plan and optimize delivery routes based on volumes, delivery addresses and pickup.

The postal operator also says it needs more flexible staffing options, such as new part-time flex positions with guaranteed hours on weekdays. And it wants the ability to match staffing levels to fluctuating mail and parcel volumes. 

An industrial review commission earlier this year called Canada Post “effectively insolvent” and recommended major reforms that mostly sided with Canada Post. 

Experts say Canada Post was slow to adjust over the past decade to the realities of declining letter mail and parcel competition.

“Canada Post reduced rates to compete with other parcel carriers in hopes of maintaining, or regaining, market share, but they were unsuccessful given their overhead and network flow — built for letter delivery — is not conducive to support a parcel delivery solution,” said Layfield. “Canada Post has no choice but to restructure their business model to even begin to compete.” 

CUPW argues that Canada Post “continues to pin the blame for its financial performance on its workers.” It said Canada Post would be in a better financial position if it had agreed years ago to raise stamp prices, as postal operators around the world did, instead of waiting until January to make the change.

Some of Canada Post’s bad business decisions stemmed from previous collective bargaining rounds where work rule restrictions were agreed to avoid a labor dispute, the industrial review commission said in May.

“I am not persuaded by CUPW’s assertion that Canada Post’s mismanagement and incompetence are the reasons for the current financial situation,” commission chairman William Kaplan wrote. “CUPW is defending business as usual, and wants to improve on the status quo with, for example, further job security enhancements and even better than best in class total compensation and terms and conditions of employment.”

Digging in

Canada Post and the mail carriers continue to maintain diametrically opposed world views. 

“After carefully reviewing CUPW’s comprehensive offers over the past few days, the corporation today urged the union to revisit its offers to align with the realities confronting the company. We remain open to reviewing and discussing amended proposals,” Canada Post said Thursday. 

“Both parties need to agree on an approach that addresses the corporation’s challenges, supports its people, and starts to secure the company for employees and customers. We are ready to make Canada Post an organization that better meets the needs of all Canadians, while building a financially sustainable future for the company,” it said.

The union put the onus on Canada Post.

“If Canada Post is serious about reaching agreements, it must stop insisting that only CUPW move and begin engaging seriously with the Union’s proposals. Negotiations require both parties at the table, not one side dictating terms and demanding that workers pay the price for Management’s failures. 

“CUPW remains committed to achieving negotiated collective agreements that strengthen the postal service and respect postal workers. We call on Canada Post to finally engage in genuine bargaining rather than simply issuing press releases that misrepresent the reality at the table,” it said.