Canada Post avoids crippling strike but not damage to parcel business

The Canadian Union of Postal Workers on Friday implemented a nationwide stoppage on overtime work, averting a full-blown strike that would have shut down mail and package delivery across Canada, after the union received a late contract offer from Canada Post.

But the threat of a strike has already done damage to Canada Post’s parcel business, and the postal operator said customers may experience delays even with the continuation of operations. 

In a statement Thursday night, Canada Post said it has already experienced a sharp drop in mail and parcel volumes as customers, fresh from experiencing a five-week strike that ended with government intervention in December, seek alternative carriers or cancel mailings to ensure items don’t get stranded in the postal system. The union said it decided to proceed with the overtime ban to minimize disruption to the public and lost pay to members. 

It is unclear how long the refusal to work overtime will last or if the Canadian Union of Postal Workers (CUPW) will escalate strike actions. The union earlier this week said it would call a strike Friday without a contract resolution. Canada Post earlier Thursday rejected a CUPW request for a two-week truce so its negotiators could review Wednesday’s proposal in detail without a labor disruption, saying union negotiators didn’t provide a serious response to its offer during a 30-minute meeting.

U.S. and Canadian parcel logistics providers, which consolidate packages heading to the same destination in a single container shipment for efficiency and easier customs clearance, have spent the past couple weeks switching customers from Canada Post to other last-mile carriers in Canada, according to industry professionals. 

And many shippers have already turned off the U.S. Postal Service pipeline out of worry that packages will get stranded in Canada Post facilities, as happened last year, said Kate Muth, executive director of the International Mailers’ Advisory Group. In fact, she added, shipments were trapped beyond the strike period because it took Canada Post a long time to deliver the backlog of mail and packages, leading the U.S. Postal Service to temporarily suspend service to Canada during the holidays.

“It’s really going to be very damaging for Canada Post if there is a strike because no one wants to run the risk of this [disruption] happening again. Once stuff moves out of the Canada Post system, people are reluctant to go back,” Muth said in a phone interview.

Many small businesses never went back to Canada Post after shifting last-mile carriers in December, unless they absolutely had to to reach very rural areas or post office boxes, echoed Alison Layfield, director of product development at ePost Global, which provides international parcel shipping services for U.S. e-tailers.

“We’ve been extremely busy the last couple of weeks putting into action contingency plans for many of our customers” and reminding them to provide a physical street address rather than a post office box so parcels don’t get stuck in the Canada Post network in the event of a strike, she explained.

Mail carriers as of Friday will work to the rule, meaning they won’t work more than eight hours per day or 40 hours per week. “Letter Carriers are to return to the depot and drop off their mail after eight hours’ work, regardless of whether they have completed their routes,” the CUPW said in a notice posted online. 

Union mulls new contract offer

Mail carriers in Canada have been working without a new collective bargaining agreement for nearly 18 months as the sides remain far apart on key issues, despite extensive mediation by the federal government.

Canada Post said it went further than before on wages, while also making changes to its delivery model aimed at improving efficiency and repairing finances. But it also withdrew some items from its last offer, including a new health benefits plan, changes to employees’ post-retirement benefits or enrollment of future employees in the defined contribution pension. 

Instead it said benefits – such as the defined benefit pension, job security rules, health and retirement benefits and vacation (up to seven weeks) – would stay the same. 

“The comprehensive offers we put forward provided increased wages, removed key sticking points and included changes needed to compete in the parcel delivery business. They also reflect the corporation’s financial and operational realities,” Canada Post said in a statement. 

Canada Post has not turned a profit in seven years and last year accepted a $716 million loan from the Canadian government to sustain operations. A big problem is that mail volume has fallen by more than half in the past 20 years.

The CUPW made clear its disappointment with the latest offer, saying on its website Wednesday that a wage increase of 13% over four years falls short of the union demand for a 19% increase in base wages to keep pace with the rising cost of living and that a 13.59% cost-of-living allowance is so high that it would never trigger a wage adjustment. It also criticized proposals for part-time workers, route efficiency tools and benefit adjustments.

Canada Post proposed increasing by 20% the number of part-time positions to support parcel delivery in urban areas seven days a week, as provided by other couriers. Currently, about 10% of the parcel delivery workforce is part time. Part-time positions will receive health and pension benefits and guaranteed hours (15 to 40 hours per week). The creation of part-time jobs increases the company’s delivery flexibility, especially on weekends, while ensuring that letter carriers aren’t required to work weekend shifts, the postal operator said. The union favors full-time jobs.

The union objects to Canada Post’s plan to make work schedules more flexible, meaning mail carriers might not have the same route every day. The mail provider, for example, also wants to introduce dynamic routing in a limited number of locations, which would allow it to plan and optimize delivery routes daily based on real-time volumes, resulting in more consistent, predictable service for customers. Dynamic routing is commonly used by large, last-mile carriers.

The union says rules governing such a system are needed and that Canada Post doesn’t have the software or technical ability to apply its route measuring system, which involves measuring mail volume, the time it takes to deliver and other factors to determine the appropriate workload for each route based on logbook entries from carriers. 

Canada Post also seeks to introduce load leveling, whereby supervisors each morning could transfer mail volumes between workers during scheduled hours without additional compensation. And it wants to delay new hires from receiving health and pension benefits until they complete six consecutive months of regular employment.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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