In Trying to Compete with Amazon, Canada Post is in a ‘Race to the Bottom’

Things are not going well at Canada Post.

Six months after a strike brought its operations to a weeks-long halt, it has still been unable to reach new agreements with its employees, who as of today are refusing to work overtime.

When the government ordered workers back to their jobs in December, then-labour minister Steven MacKinnon established an Industrial Inquiry Commission to study the dispute and produce a report on its context and causes.

Released last week, the report didn’t mince words in its assessment of the Crown corporation’s financial situation. “Canada Post is facing an existential crisis: It is effectively insolvent, or bankrupt,” lawyer and arbitrator William Kaplan wrote.

While he agreed with the Canadian Union of Postal Workers (CUPW) that Canada Post should continue to exist as a public service with a mandate to serve all Canadians, he stressed that, given the current state of the courier industry and Canada Post’s financial peril, a significant transformation is needed.

“The world has changed, and both Canada Post and CUPW must evolve and adapt,” wrote Kaplan. “Merely tinkering with the status quo is not an option.”

When he says “the world has changed,” he’s talking about the shifts to digital communications and online marketing that have decimated letter mail and direct-marketing mail, which saw Canada Post go from delivering around 5.5 billion letters in 2006 to around 2.2 billion letters in 2023. This is similar to declines seen by letter carriers around the world.

He’s also talking about how, especially since the start of the COVID-19 pandemic, parcel delivery has boomed but Canada Post has actually seen its share of the parcel-delivery market decline, from 62% in 2019 to 29% in 2023.

Kaplan points to private sector competitors that “have almost completely taken over in Canada,” especially in the high-density urban and suburban areas that are the most profitable to deliver to.

Kaplan notes these companies are able to charge what they want and deliver only where it’s profitable to do so, because they are not bound by any of the obligations Canada Post is, like the Universal Postal Convention and the Canadian Postal Service Charter.

Crucially, private courier companies have “virtually unlimited access to capital” and lower labour costs, with non-unionized companies having “an even greater edge.”

“Many of them rely on their drivers to supply their own vehicles,” wrote Kaplan. “They do not have collective agreements restricting the exercise of management rights, especially the ability to hire part-time employees and to schedule them depending on volume.”

Speaking to PressProgress, Simon Enoch, a senior researcher with the Canadian Centre for Policy Alternatives, said companies like Amazon, and the independent contractors that work for services like Amazon Flex, are now setting the standard for the whole courier industry.

“That delivery landscape is what you expect from Amazon: vociferously anti-union, low pay, precarious, high rates of injury, massive delivery quotas that sweat the workforce,” said Enoch. “So that’s what Canada Post has to compete with.”

Alison Braley-Rattai, an associate professor of labour studies at Brock University, said the increasing dominance of companies like Amazon is an “enormous” part of the dispute between Canada Post and CUPW.

“It speaks to the problems that we experience in terms of having and trying to have good, dependable jobs in advanced-stage capitalism, where you are so much at the mercy of market forces,” said Braley-Rattai.

Many of Canada Post’s competitors charge rural surcharges when delivering to remote areas and then rely on Canada Post for last-mile delivery when their infrastructure falls short.

“Even then, those companies still rely on Canada Post for last-mile delivery, because they just don’t have the infrastructure to deliver to particularly remote communities that are fly-in,” explained Enoch.

Some of Canada Post’s competitors have unionized workforces. Workers at UPS and Purolator, which is owned by Canada Post, are represented by Teamsters Canada.

The majority of workers at DHL in Canada are represented by Unifor, and on May 10, they voted 97% in favour of their own strike action. A press release from Unifor says that DHL “has been aggressively reducing hourly workers from full-time to part-time in locations across the country.”

However, some of the biggest forces in the courier industry are not unionized.

In an email to PressProgress, Teamsters Canada director of communications Marc-André Gauthier wrote that despite multiple unionization drives, workers at FedEx remain non-union.

“The company has a well-documented history of opposing unionization and has actively resisted our efforts across the country,” wrote Gauthier.

Despite numerous attempts to organize Amazon workers by the Amazon Labor Union, Teamsters and Quebec’s Confédération des syndicats nationaux (Federation of National Unions), the company has delayed bargaining and closed warehouses in response to successful unionization drives.

Working conditions at Amazon are notoriously bad, with productivity expectations that have resulted in workers urinating in bottles, fainting from exhaustion and sustaining injuries at twice the rate of those at other warehouses.

Enoch said rather than looking for alternative sources of revenue, all of which were rejected in Kaplan’s report, Canada Post is trying to compete with the likes of Amazon, which he described as “an impossible task.”

“It’s just a race to the bottom, and nobody wins, except for the owners of these companies.”

So what now?

According to the report, Canada Post has not been profitable since 2017, lost $748 million in 2023 and would not have been able to meet payroll obligations this year without a $1 billion loan from the government in January.

Along with recommending that the postal service end daily door-to-door delivery for individuals (but not businesses), lift a moratorium on rural post office closures and increase postage prices, Kaplan made three recommendations regarding CUPW’s collective agreements, stating that:

• Canada Post “must have the flexibility to hire part-time employees working part-time hours to deliver parcels on the weekend and to assist with volume during the week.” Kaplan stressed these workers should be paid the same as full-time workers, receive benefits and have access to the pension plan.
• Canada Post must be able to re-assign workers who have finished their routes early, rather than letting them leave work early.
• Canada Post should pilot and then introduce dynamic routing, allowing the company to change delivery routes depending on how much there is to deliver on any given day.

CUPW released a statement after the report went public, saying the union fundamentally disagreed with the recommendations and criticizing it for skewing “heavily in favour of Canada Post’s positions and recommendations.”

“These recommendations amount to service cuts, contracting out, and major rollbacks to important provisions in our existing collective agreements,” wrote CUPW. “There is also no guarantee that if these changes are made, Canada Post will increase its parcel business.”

Braley-Rattai told PressProgress Kaplan’s rejection of the majority of CUPW’s arguments “doesn’t give the union a lot of room to maneuver.”

Since the release of the report, Canada Post has sent the union global offers for both bargaining units, including a lower wage increase than what the union proposed and the introduction of 20% more part-time positions than exist today. Canada Post’s offer would result in 30% of the total postal workforce working part-time hours.

According to CUPW, the union offered a two-week “truce” period to continue negotiations without the threat of a strike or lockout, but Canada Post refused.

Braley-Rattai said CUPW is reluctant to relinquish hard-won collective-agreement rights, like full-time employment, benefits and ample sick leave. In the report, Kaplan acknowledged that reality, but disagreed with the union that the existing collective agreements could be used to implement weekend delivery.

“Kaplan does make the important point that those should also be good jobs,” said Braley-Rattai. “They should have parity on a pro rata basis, presumably, with the kinds of things that the full-timers have.”

However, Enoch said the union is justified in its fears that any concessions on terms in the existing collective agreements would represent a slippery slope towards increasingly precarious gig work.

“The union has said, ‘We don’t want Canada Post workers becoming gig workers,’ but I think this is the first step towards it,” Enoch told PressProgress.