Canada Post has lost more than $3-billion since 2018. It is running out of cash reserves and owes more than $1-billion. Workers walk the picket line while on strike in Mississauga, Ont., on Nov. 20.Nathan Denette/The Canadian Press
As the Canada Post strike enters its second week, the postal service is facing deeper questions about its long-term viability and mounting financial losses, particularly as low-cost couriers drum up business for crucial parcel deliveries.
Canada Post has called its financial situation “unsustainable,” and in its 2023 annual report, chief executive officer Doug Ettinger said the Crown corporation was at a “critical juncture” and would continue losing money if drastic changes were not made to its operations.
That message was reiterated on Friday, when Canada Post reported a financial loss of $315-million between June and September of this year. Canada Post has lost more than $3-billion since 2018. It is running out of cash reserves and owes more than $1-billion.
Canada Post is often the low-cost option for sending mail and packages within Canada, but its operational costs – notably worker compensation – run much higher than those of its competitors. These issues are at the heart of the labour impasse, which has seen more than 55,000 members of the Canadian Union of Postal Workers strike since Nov. 15. The two sides are negotiating on many issues, including wages and how to staff a daily operation that makes Canada Post more competitive.
“Their finances are a mess,” said Ian Lee, associate professor of management at Carleton University’s Sprott School of Business. “Without significant and urgent reforms, Canada Post could go the way of Blockbuster Video and disappear.”
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Canada Post generates the bulk of its revenue from two lines of business: letter mail and parcel delivery. The former is in steady decline: Between 2006 and 2023, Canada Post went from delivering 5.5 billion letters a year to two billion letters and saw a revenue drop in that segment of about 30 per cent.
On the other hand, parcel delivery is a growth area. In 2015, Canada Post generated roughly $1.6-billion in revenue from delivering parcels, excluding sales from Purolator Inc., a shipping and logistics company owned by the Crown corporation. By 2020, parcel revenue at Canada Post had more than doubled to $3.4-billion, owing to the boom in e-commerce that was brought on by the pandemic.
Purolator is a profitable entity of Canada Post. In 2023, it recorded a profit of $293-million that offset Canada Post’s losses. Its workers are unionized with Teamsters Canada.
Since 2020, Canada Post has struggled to gain a greater share of the parcel delivery market: In 2023, parcel revenue still hovered at the $3.4-billion mark, even as parcel delivery continued to soar across the country.
The pandemic gave rise to a flurry of third-party delivery companies that are built on a low-cost labour model of gig workers. Much like the tech giant Uber, these app-based companies hire independent contractors who conduct deliveries around the clock, seven days a week and often have their wages determined by an algorithm. The faster they work, the more the apps incentivize them with preferable delivery routes and cash bonuses.
One example is Intelcom, a Montreal-based delivery company used primarily by Amazon for last-mile delivery. Intelcom has over 400 independent delivery contractors who each hire a team of gig workers as delivery drivers. These drivers are not employees of Intelcom – they are paid by the company through an app, depending on the number of deliveries performed daily. Intelcom drivers can work seven days a week, 13 hours a day, performing 110 to 150 deliveries daily. Intelcom outsources the management of these drivers to its “contractors,” who are also not employees of Intelcom.
By contrast, Canada Post has an employee base of almost 60,000 people, with roughly 20 per cent of them hired as temporary workers without a pension plan or benefits. Canada Post’s full-time employees participate in a defined benefit pension plan. In 2023, the company generated $6.9-billion in revenue. The cost of labour and employee benefits that year was $4.9-billion, which the corporation has repeatedly said is hampering its ability to compete.
Canada Post says these low-cost private operators have gained significant ground, culling its market share in parcel delivery to 29 per cent in 2023 from 62 per cent before the pandemic.
In a recent report, Prof. Lee found that Canada Post’s operating costs per hour for parcel delivery ranged from $50 to $60, based on data from the Crown corporation and private logistics companies. The likes of Purolator, UPS and FedEx had operating costs of $40 to $50 per hour, and for private competitors such as Intelcom (whose gig workers use their own vehicles), they were $20 to $30.
The corporation is slowly trying to turn its work force into one that has a higher proportion of temporary and part-time workers who are less expensive – a move that the union is resolutely opposed to.
CUPW often points toward the hundreds of millions that Canada Post has spent on investments (like setting up a parcel sorting facility in Toronto for $470-million) as evidence that it can afford to increase wages and maintain full-time jobs. The union has, on multiple occasions, suggested that Canada Post expand its revenue streams by offering financial services at the post office, otherwise known as postal banking.