Canada Post in trouble

Canada Post in trouble by Maj (ret’d) CORNELIU, CHISU, CD, PMSC FEC, CET, P.Eng. Former Member of Parliament Pickering-Scarborough East Once a revered Canadian institution, Canada Post is now on the brink of bankruptcy. Years of bad management and unrealistic union demands have resulted in soon relegating this institution to the pages of history books. The combined effects of the Covid-19 pandemic, the decline of the letter as a primary means of correspondence, and the rise in popularity of the parcel have not been kind to the postal service. Despite the bleak outlook for its business future, Canada Post employees will be in a strike position next week, threatening to suspend mail and parcel delivery across the country. The Canadian Union of Postal Workers, which represents 55,000 of the service's employees, threatens to have its members walk off the job if there is no progress on a new collective agreement. If that happens, no new mail will be accepted and any items already in the system will be held until the strike is over. So why are we facing another strike when we just had one last November-December that lasted 32 days and deeply disrupted everything from Christmas gifts to passport delivery. The reason is that that the labour dispute was never resolved. The fact is that the financial situation of Canada Post has been in very bad shape for years. Here are the facts on why it is so bad. The last time Canada Post made a profit was 2017. Since then it has lost $3 billion. The annual loss in 2023 was $748 million, even worse than 2022 when it lost $548 million. Until recently, Canada Post funded its operations without any taxpayer money. That changed in January this year, when the federal government loaned it $1 billion to stay afloat. This summer, Canada Post will have to refinance other loans worth $500 million and, it says, by 2026 it will need $1 billion a year from the government just to meet its financial obligations. Canada Post hit peak letter delivery nearly 20 years ago. In 2006, it delivered 5.5 billion letters. In 2023 it only delivered 2.2 billion letters, and that included a lot of bills and other official correspondence. Times have changed and electronic mail has become the norm. Many people in this country have grown up never knowing the practice of writing a letter to someone and putting it in the mail. With the advent of AI, another new technology, which is on the horizon it is difficult to see how Canada Post will be able to adapt in due time to these new challenges. It is clear that the physical distribution of letters to households has become a problem through natural attrition. Since 2006, Canada has added three million new addresses as the population has grown. Canada Post has to serve them all. However, it is delivering in excess of three billion fewer letters. The mismatch of revenue and expenses is now so bad, that it amounts to an existential crisis. When it comes to parcel delivery, there is no monopoly, there is no set price, and the competition is fierce. It is easy to recognize the big name competitors: FedEx, UPS, DHL, as well as other players who are contracted by the likes of Amazon. Canada Post admits it is being beaten badly. In 2019, it delivered 62 per cent of the packages in this country. In 2023, their delivery rate was down to 29 per cent. What makes that figure even more devastating is that Canada Post continues to lose its share of a rapidly expanding market. Millions more parcels are being delivered every year in this country, but Canada Post is getting less and less of the action. Canada Post says part of the reason it cannot compete is that it does not deliver on weekends, while many private companies do so. It wants to hire more part-time staff to work those days, but the union says that amounts to gig work, and won't accept it. Canada Post claims most of its employees cannot be laid off under any circumstances, which it characterizes as "jobs for life." Indeed the collective agreement says "there shall be no temporary or permanent lay-off of any employee (excluding term employees)" who have been employed for more than five continuous years, in the case of older employees. Hires that are more recent need 10 years of experience to avoid layoffs. Clearly, the situation cannot continue like this. If it is not dealt with, and promptly, Canada Post will become bankrupt and taxpayers’ money should be not committed further to a crown corporation that can no longer manage itself sustainably. With negotiations between management and union continuing and the union ready to go on strike, it will soon become evident how things are evolving. In the meantime it is clear that this situation cannot continue as before and drastic measures need to be taken in order to serve Canadians better and save taxpayers’ money. It seems that this is now a government problem so let us see how they deal with it. What do you think?