Citing “unsustainable” losses, stalled contract talks and dwindling numbers of Canadians sending letters, the federal government is giving Canada Post the go-ahead to end home delivery, close some rural post offices, and send mail by land instead of air.
In a press conference Thursday afternoon, federal minister for government transformation, public works and procurement Joël Lightbound is set to announce that he’s giving the Crown corporation 45 days to come up with a plan to implement the broad restructuring, which he called a necessary step to keep Canada Post alive.
“This situation is unsustainable. Canada Post is effectively insolvent, and repeated bailouts are not a long-term solution. Transformation is required to ensure the survival of Canada Post and protect the services Canadians rely on,” Lightbound said in a press release prior to his press conference.
The Crown corporation has racked up more than $5 billion in losses since 2018, and is on track to lose $1.5 billion in 2025, and is losing roughly $10 million per day, Lightbound said.
Letter and parcel volumes have also plunged, Lightbound said, noting Canada Post delivers an average of 2 billion letters per year, down from 5.5 billion 20 years ago. At the same time, he noted, the number of households served by Canada Post has increased.
“That means fewer letters are being delivered to more addresses, while fixed costs remain high,” said Lightbound.
Only a quarter of Canadians get home delivery with the rest using community mail boxes.
The Crown corporation’s share of the parcel market has also dropped to 24 per cent, from 62 per cent in 2019, he added.
Closing some of the 4,000 post offices currently designated as rural could lead to $400 million in savings, said Lightbound, who argued that many of those offices are no longer actually in rural areas. A ban of closing post offices has been in place since 1994.
“Canada has changed. This means that areas that used to be rural may now be suburban or even urban, but are still required to operate as rural post offices,” said Lightbound. “Canada Post must return to the government with a plan to modernize and rightsize its network.”
The changes were all recommended by veteran mediator William Kaplan in a report delivered May 15 after he conducted an Industrial Inquiry Commission.
Contract negotiations between Canada Post and the Canadian Union of Postal Workers have dragged on for more than 18 months and led to a month-long strike late last year. Earlier this month, the union began a ban on delivering flyers, and dropped its previous ban on its members working overtime, which had been in place since May 23.
In early August, CUPW members rejected the Crown corporation’s “final” contract offer in a vote overseen by the Canada Industrial Relations Board after an order from federal jobs minister Patty Hajdu, who used her authority under Section 108.1 of the Canada Labour Code.
In a memo posted on the union’s website Monday evening, the head of the Canadian Union of Postal Workers said the Crown corporation was planning for “massive” service cutbacks.
“For much of the past year, Canada Post has been laying the groundwork for massive service cutbacks. The Corporation has taken every chance it can to play up its financial condition, blaming an ‘outdated’ regulatory framework ‘built for a previous era,” said CUPW national president Jan Simpson.
