Canada Post strike puts strain on Christmas sales

It’s one of the biggest shopping weekends of the year, but for many Canadians, this year’s Black Friday sales may not arrive in time for Christmas, a death knell for already hard-hit small businesses. It may be a sign of.

Two weeks into Canada Post’s national postal strike, many businesses say they have suffered significant financial losses as customers have to wait for orders. Inventory is stored in warehouses across the country, increasing shipping costs.

Lorne James, who runs model train company Otter Valley Railway in London, Ont., estimates he has lost C$120,000 ($85,600, £67,200) in sales since the strike began.

“A significant number of businesses are going to disappear,” he told the BBC. He estimates that about 80 per cent of orders are received online, and up until two weeks ago, 99 per cent of deliveries were made through Canada Post.

Negotiations between the company and the Canadian Union of Postal Workers (CUPOW) broke down amid huge financial losses, particularly over the issue of allowing the company to hire temporary workers to expand its deliveries to seven days a week.

Bruce Winder, a Canadian retail analyst, said while the growth of online shopping has led to new delivery companies entering the market, Canada Post is often the most affordable and many other companies don’t deliver. He said it has a delivery network to rural areas.

Winder said the strike could not have come at a worse time. For businesses that sell gift items, Christmas sales can account for 30 to 40 per cent of annual revenue, he told the BBC.

He also predicted that Canadians were already planning to spend less this year due to the rising cost of living.

“There’s a Canada Post strike and consumer sentiment is negative, so it’s a double whammy,” he says.

Mr James said his company was doing better than other delivery services because it had negotiated contracts with them before the strike. But shipping overseas with another carrier is too expensive, and the company is missing out on some orders this holiday season.

In an open letter, Shopify, a Canadian company that helps businesses open online stores, urges the government to intervene to “prevent a devastating blow to Canada’s small businesses at the most critical time of the year.” I asked for it.

The letter was filed after a federally appointed mediator suspended negotiations on Wednesday.

Labor Secretary Stephen McKinnon said of X: “His assessment is that there are too many gaps between the parties on important issues for mediation to be successful at this time.”

The union says it is negotiating for wage increases in line with inflation, better benefits and that the company agree not to hire outside contractors. Meanwhile, Canada Post says it needs to have more flexible working hours and hire more temporary workers in order to move to seven-day delivery and become more competitive.

The union told the BBC that the current impasse “didn’t have to be this way”.

“We made the difficult decision to call a strike for the first time after Canada Post announced the termination of existing collective agreements, the elimination of health benefits and layoffs,” the union said in a statement.

The statement said postal workers are “deeply aware” of the toll the strike is having on communities and noted the decision to delay contract negotiations to allow workers to deliver during the pandemic.

The company said it is replacing full-time unionized jobs with temporary “gig” workers.

In a statement to the BBC, the company said it understands the impact this strike is having on Canadians, but it has no choice but to make transformative changes.

“With financial losses mounting into the billions, Canada Post needs more flexibility over its outdated mail-based delivery model. It’s about expansion.”

Meanwhile, the union said it believed the company could make a profit without gig work, pointing to a proposal to adopt the British model of having the Post Office provide low-cost postal banking services.

Ian Lee, a public policy professor at Carleton University who has spent decades studying Canada’s postal service, said the issue is the survival of Canada Post itself.

“It’s Armageddon,” he told the BBC, likening Canada Post’s fate to that of Blockbuster Video.

Canada Post, a for-profit company owned by the federal government, posted a loss of C$749 million in fiscal year 2023.

The company’s biggest business used to be letter delivery, but with the rise of the internet, letter volume has fallen from 5.5 billion in 2006 to 2.3 billion by 2022, according to the company’s annual report.

The advent of online shopping has led to a significant increase in home delivery, but the company faces stiff competition in this space, especially from Amazon, which uses its own couriers for many of its orders.

The United States Postal Service (USPS) is facing similar problems, reporting a net loss of $9.5 billion last fiscal year.

On Friday, the USPS announced it would suspend acceptance of mail destined for Canada as Canada Post “has demonstrated its inability to process and deliver international mail and services as a result of the ongoing national strike.”

But as the strike dragged on, Canada Post’s finances worsened. The company announced that it has delivered 10 million fewer packages since the strike began. The company began laying off striking workers this week, a move the union says is illegal.

Canada Post said the layoffs are in accordance with Canada Labor Law.

Some companies say the strike has made them reconsider who they use to make deliveries.

“We’re very keen to consider other home delivery services in the future,” said John Barrett, director of sales and marketing for Vesey’s Seeds, Canada’s largest mail-order horticulture business. .

“I think their future is very bleak.”

He said 250,000 seed catalogs were sitting in warehouses undeliverable. This means not only are you paying extra to store them, but you’re also missing out on significant business because you don’t have a catalog for customers to order from.

Earlier this month, the Minister of Labor issued a secret work order to halt the port strike. However, there is no indication that the government intends to intervene in the postal workers’ strike.

When contacted by the BBC for comment, Mr. McKinnon’s office pointed to an interview he gave to Radio-Canada in which he said, “This is a turning point for Canada Post and In our opinion, it is essential that employees, trade unions and businesses work together to agree on a path forward. ”

McKinnon also wrote of X Magazine, “As with all conflicts, they alone are responsible for the outcome of this conflict and its resolution.”

Barrett says that response is not enough.

“It’s amazing that we’ve let this issue go on for so long without any indication that it’s going to be resolved anytime soon,” he said.

“It’s time for the government to act. I blame the government more than the Post Office or the (trade unions).”