Report of the Industrial Inquiry Commission: Canada Post

Canada Post

Canada Post, which became a Crown corporation in 1981, has a long and important nation-building history that predates Confederation. For more than 200 years, it has connected Canadians from coast to coast to coast, and Canadians continue to rely on its services. It delivers mail to more than 17 million different addresses across the second-largest country in the world.

As a national postal service, Canada Post is obliged to fulfill Canada’s responsibilities under the Universal Postal Convention, an international treaty signed by nearly 200 countries belonging to the Universal Postal Union. It requires signatories to maintain a basic customary postal service, known as the Universal Service Obligation (USO), and it has five core components:

• universal service regardless of location
• affordability, with a uniform letter mail price, regardless of location or distance
• timely, regular service
• accessible service to everyone, regardless of location
• maintenance of the quality of service

Canada Post enjoys a statutory monopoly on the delivery of letter mail – an exclusive privilege set out in the Canada Post Corporation Act. The Act stipulates that Canada Post has responsibilities including

• to establish and operate a postal service for the collection, transmission and delivery of messages, information, funds and goods both within Canada and between Canada and places outside Canada;
• to conduct its operations on a self-sustaining financial basis while providing a standard of service that will meet the needs of the people of Canada and that is similar with respect to communities of the same size.

The Postal Charter, implemented in 2009, sets out the service standards expectations of the shareholder, the Government of Canada. Canada Post must be transparent in the way it “provides quality postal services to all Canadians, rural and urban, individuals and businesses, in a secure and financially self-sustaining manner^{Footnote 1}.”

Canadian Union of Postal Workers

The Canadian Union of Postal Workers (CUPW) is a proud union. The strike it launched on June 30, 1981, introduced widespread paid maternity leave and changed Canadian society and workplaces for the better, as has its advocacy for job security, pay equity, occupational health and safety, and the right to strike.

CUPW has 44,000 members who work at Canada Post. Urban employees are primarily responsible for mail processing, collection, and delivery, and retail operations in urban areas. The Urban bargaining unit also represents employees who maintain the mail-processing equipment, among other duties and responsibilities. RSMC bargaining unit members are responsible for the transportation and delivery of mail in rural and some suburban areas. All told, there are 22,500 routes, 462 depots, 22 processing plants, and 5,800 corporate and franchise retail post offices.

CUPW

In CUPW’s view, Canada Post must remain public: It is not a private sector corporation but a public service with a larger mission set out in the Act and the Postal Charter. Its mission is to deliver to every Canadian address, but to do so as a public service, not as a for-profit corporation. That means meeting the needs of the Canadian people while safeguarding the rights, working conditions, and invaluable contributions of CUPW members, and not by attempting to compete with existing and new courier competitors with their gigified jobs and substandard wages and working conditions. Even with market challenges, Canada Post should be a model employer – delivering mail and parcels but also setting the standard for good, sustainable, and, whenever possible, full-time jobs. Accordingly, in the recent collective-bargaining round, as in previous ones, CUPW made clear it would not engage in negotiating away hard-fought-for job security and other collective agreement provisions but, rather, sought improvements to them. It was imperative that any benefits arising from productivity increases be equitably shared with employees.

CUPW argued that the government-imposed moratoriums on closure of rural post offices and community mailbox conversions should be continued. Rural post offices played a role in prompting national unity and provided good jobs in high-unemployment regions, and any closures would result in environmental costs as people would have to drive some distance to access postal services. Door-to-door delivery was a long-standing feature that met the needs of the Canadian people, particularly the elderly and disabled, while community mailboxes presented accessibility and other challenges.

In its submission, CUPW rejected Canada Post’s claims of fiscal distress as overblown and opportunistic – a pretext for unjustified concessionary bargaining. It also objected to the timing of the government bailout, coming days before the Commission began its first set of public hearings. It said it was prepared to work with Canada Post to roll out weekend, evening, and same-day parcel delivery services, but only if existing collective agreement provisions were respected and improved. CUPW questioned Canada Post’s reluctance to work within the four corners of the collective agreement.

CUPW observed that it had put forward a detailed and thoughtful plan to provide for weekend delivery using a full-time workforce – and this was a major union concession – but that Canada Post refused to engage in negotiating it or studying it through a pilot project. Canada Post’s preference for flexibility, by relying on part-time employees for weekend delivery, should, it stated, give way to the union’s commitment to full-time employment and job security especially, since the union had demonstrated that its plan for hiring more full-time employees to perform weekend work was more cost effective and efficient than relying on part-time employees.

CUPW’s submission also stressed that postal workers suffered the second-highest frequency of disabling injuries among federal workers – from exposure to inclement weather, slip and falls, carrying heavy loads, and dog attacks. The union sought responsive revisions to the Short-Term Disability Plan (STDP).

Canada Post

Canada Post was categorical: Without the Government of Canada loan or line of credit, it would not at some time in 2025 have been able to meet its obligations – payroll, for one, as well as redeeming the $500 million in bonds coming due in the summer of that year. The crisis was not manufactured: It had long been apparent for all to see and could no longer be ignored. Yet CUPW would not adjust its bargaining demands to address the problem, making it impossible to reach a collective agreement setting out a financially sustainable forward path.

Canada Post still had to operate within the obligations set out in the USO, the Act, and the Postal Charter, but its business environment had fundamentally changed. The demand for letter mail delivery was rapidly and irreversibly declining while the demand for parcel delivery had soared. Courier company competition was expected to grow. Canada Post wanted to maintain and expand its parcel delivery share, but to do that, it needed to make immediate changes. These changes would be modest and incremental to start – weekend parcel delivery by part-time employees; capacity to make effective use of part-time, flexible employees during the week; and the ability to avoid trapped time (when employees completed their allotted work before their shift ended but could not be readily and economically reassigned to other work). Canada Post needed operational flexibility to respond in real time to changing volumes, including dynamic (flexible) routing and load levelling. 

Also required, in Canada Post’s submission, were changes to the Postal Charter to provide for realistic and sustainable delivery standards, an updated process for setting postage rates, and the end of the moratoriums on rural post office closures and community mailbox conversions. The moratorium on rural post office closures made no sense: Because of the growth and expansion of Canadian cities, many rural post offices were now located in urban areas but were still subject to the moratorium. Daily door-to-door letter carrier delivery, to a minority of Canadian addresses, could no longer be justified, given its high cost, based on an average delivery per household of two letters a week.

Alternative Visions for the Future of Canada Post

In its submission to the Commission, CUPW made many suggestions for expanding Canada Post’s business, thereby improving its financial situation. It adopted some of these ideas from other countries where they have been successful. The suggestions include capitalizing on cross-border e-commerce and fostering a Buy Local, Ship Local movement; expanding into banking, financial, and insurance services, especially in remote and rural areas; reintroducing the Food Mail Program in the north and grocery delivery more generally; turning post offices into community hubs, especially in more isolated regions, in addition to their traditional roles; using letter carriers as a check-in service on Canada’s aging and disabled population; and expanding into providing passport and other government services.

In contrast to CUPW’s vision for the future, Canada Post focused on its current dire financial situation and stated that Canada Post required prompt adjustments to existing and restrictive collective agreement work rules, ending the government-imposed moratoriums on rural post office closures and community mailbox conversions, as well as changing the process for setting postage rates. Over the longer term, it would need in-depth transformative change, possibly including to the pension and retirement benefit plans. Without immediate adjustments allowing it to affordably and efficiently focus on seven-day-a-week parcel delivery, its market share and its losses would continue to grow and it would not return to financial sustainability in the short, medium, or long term.

Basic Agreements and Disagreements Between the Parties

CUPW acknowledges that Canada Post has a revenue-generating problem, that letter mail volume has irreversibly declined, and that offering weekend parcel delivery is the immediate priority. Without weekend parcel delivery, Canada Post’s market share will continue to decline. In the January and March Commission-facilitated mediation sessions, significant progress was made on several outstanding items, in particular on large parts of the RSMC collective agreement and on revisions to the Short-Term Disability Plan.

But agreement stops there. Canada Post insists that a process leading to transformative change must begin. Business as usual cannot continue if it is to adjust to the new business reality. CUPW, in contrast, is intent on defending gains made over decades of collective bargaining, which is completely understandable. Between these opposites, a common ground must be found – one that recognizes that both parties have legitimate interests. 

A Financial Crisis

CUPW rejects Canada Post’s claim that the financial crisis is an existential one and, but for the January 2025 Government of Canada bailout, it would have been unable to meet its current financial obligations. It calls for an independent financial review to get to the truth.

Given the conclusions reached in the various studies and reports listed above, I reject CUPW’s assertion that Canada Post’s financial situation has been manufactured for tactical reasons or that the Government of Canada announcement of the $1 billion-plus lifeline loan in January 2025 was strategically timed and not a real necessity. The corporation’s financial statements have been audited, reviewed by officials at the Department of Finance, and approved by the Auditor General of Canada.

I am also not persuaded by CUPW’s assertion that Canada Post’s mismanagement and incompetence are the reasons for the current financial situation. Even assuming that the corporation made both good and bad business decisions, the principal reasons for the financial losses are easy to identify.

• The decline in letter mail caused by electronic substitution and the increase in parcel mail, now mostly delivered by competitors.
• Collective agreement work rules that restrict Canada Post from exercising basic management rights, such as assigning existing employees additional work when they have finished their assigned tasks (trapped time) and hiring part-time employees for weekend and other high-volume periods.
• Government-imposed fetters, namely the moratoriums on closing rural post offices and ending community mailbox conversions, need to be reversed if Canada Post is to have any kind of financially sustainable future.

The proposals CUPW made to grow Canada Post’s business are also unrealistic or duplicate services already provided by others – introducing postal banking, seniors check-ins, establishing artisanal markets at postal stations, and transforming postal stations into community social hubs. In my view, given the financial crisis, Canada Post must focus on saving its core business, not on providing new services.

How Best to Respond to the Crisis

CUPW insists that existing collective agreement provisions allow for necessary change such as the introduction of weekend parcel delivery and flex arrangements during the week. No objective analysis of current collective agreement provisions supports this submission. For example, the reason why employers rely on part-time and casual employees is to give them flexibility to adjust staffing to meet evolving needs – and that is currently impossible.

Canada Post argues that, while transformative change is the long-term goal, unless the cash hemorrhage is staunched and weekend parcel delivery and other staffing flexibility measures introduced, together with the end of the moratoriums on rural post office closures and community mailbox conversions, it has no future.

1.1 The Immediate Background

On November 15, 2024, two Canadian Union of Postal Workers (CUPW) bargaining units went on strike against Canada Post: Urban Postal Operations (Urban) and the Rural and Suburban Mail Carriers (RSMC). Some weeks later the Minister of Labour intervened. I was appointed an Industrial Inquiry Commissioner on December 16, 2024, and given a mandate set out in Terms of Reference. The Minister also invoked section 107 of the Canada Labour Code, leading to the Canada Industrial Relations Board (CIRB) ordering both bargaining units back to work on December 17, 2024. The CIRB also extended both collective agreements until May 22, 2025, one week following the May 15, 2025 deadline for submission of this Report. At that time, Canada Post and CUPW (the parties) may resume their collective bargaining and reach new collective agreements, or the union may strike, and/or the company may lock out, subject to the Canada Labour Code. The Minister or Parliament may also direct or legislate binding interest arbitration, or the parties may agree to refer the outstanding issues to interest arbitration. (It is most unlikely that Parliament would legislate a collective agreement.)

1.2 The Immediate Challenge

On January 24, 2025, two days before the first scheduled public hearings, the Government of Canada made the following announcement:

Today, the Government of Canada is announcing its intention to exercise provisions under the Canada Post Corporation Act that will allow Canada Post access of up to $1.034 billion in the 2025–26 fiscal year to maintain its solvency and ensure it can continue its operations as it faces ongoing financial challenges. Any cash provided will be on an as-needed basis to pay non-discretionary obligations. Canada Post is a critical service that connects Canadians from coast to coast to coast. It is often a lifeline for Canadians in rural, remote, and northern communities, and is vital to ensuring that these communities, that often have limited access to alternative mail and parcel delivery services, are not left behind. In addition, many small and medium-sized enterprises rely on Canada Post for parcel and letter delivery, which are important to maintaining and growing their businesses.

The cash injection, which is a temporary measure and which Canada Post will be required to repay, will provide a much-needed financial bridge to ensure Canada Post can continue to serve Canadians while working with the Government on the changes required to ensure the long-term viability of Canada’s postal system. The cash injection remains subject to further approvals.

Despite a recent stamp price increase, Canada Post will fall below its necessary operating cash requirements in 2025. Providing this cash injection will prevent insolvency and ensure the continuity of postal services. As well, Canada Post’s more than 68,000 workers depend on its continued stability to receive their pay and benefits.

This cash injection will ensure the continuity of Canada Post operations, however, it is clear that the corporation must be put on a path to viability. We look forward to working with Canada Post management on this as we go forward.

The government announcement is categorical. But for this loan/line of credit, at some time in 2025, Canada Post would have been unable to meet payroll and its other current obligations. It would also have been unable to repay $500 million of its Series 2 bonds that are due in July 2025. CUPW asserts that the timing of this announcement is suspect (as is Canada Post’s financial reporting more generally, as discussed in section 6 below) – coming as it did on the eve of the first Industrial Inquiry Commission hearings – but that submission, along with its assertion that this is an entirely manufactured financial crisis designed to wrest collective-bargaining concessions from the union and its members, is, for reasons that follow later, categorically rejected.

Notably, in its written submissions, and at the hearings, CUPW acknowledged that there were some financial challenges brought about by the decline in letter mail and parcel volumes, but, again as discussed below, the union was of the view that these were the result of Canada Post having made many bad business decisions (Tab D, at D.1.2), combined with its refusal to consider union suggestions on how best to confront these challenges by taking advantage of existing collective agreement provisions and by growing the business through pursuing CUPW’s proposals setting out numerous suggested ways of doing so. All these submissions are canvassed later in this Report (Tab D at D.1.4).

Nevertheless, and subject to further elaboration, the objective evidence establishes with clear, cogent, and compelling evidence that Canada Post’s fiscal challenges are long-standing and have been well known for years – certainly by Canada Post, CUPW, and the Government of Canada, to name just three – and that insolvency – to the extent that a Crown corporation can ever be insolvent – was a matter of when, not if. Canada Post, as currently configured, is not financially sustainable. While CUPW has its suspicions, they are just that. The books are not “fixed”; they are audited by an independent external auditor, reviewed by the Department of Finance and the Auditor General of Canada. There is full and transparent quarterly and annual reporting that meets all applicable generally accepted accounting principles. Canada Post is effectively insolvent and would likely have run out of money if it were a private sector business. What to do about this situation is another matter.

1.3 Process

After the Commission was established, preliminary meetings were scheduled; the parties were consulted and provided with the opportunity to make suggestions about how the Commission should go about its work.

With their express agreement, I met with them on January 16 and 17, 2025, in Ottawa in an attempt – ultimately unsuccessful – to assist them in resolving the outstanding collective-bargaining dispute. While some progress was made, discussions quickly reached an impasse. Public hearings were held on January 27 and 28, and February 19 and 20, 2025. In advance of the first hearing dates, the parties were asked to provide an overview of the current situation through an examination of the Canada Post Act (Act) and the Canadian Postal Charter (Postal Charter), and to set out short-, medium-, and long-term prescriptive visions for the financially sustainable delivery of letter mail and parcels in Canada. The second set of hearings were focused on the Terms of Reference and the specific collective agreement (and other) proposals that would be required to achieve the plan presented at the first set of hearings. There was some understandable overlap in submissions made at the January and February hearings. Further written submissions followed the February hearings.

At the conclusion of the February hearings, the parties expressed interest in resuming their negotiations and, again, asked for my assistance in doing so. Further mediation sessions were held on March 1 and 2, 2025. Those discussions also quickly reached an impasse.

2.1 Canada Post

Canada Post has a long and important nation-building history that predates Confederation. (Once a government department, it became a Crown Corporation in 1981.) For more than 200 years, Canada Post has connected Canadians no matter where they lived: by canoe, horse, steamship, railway, airplane, and always by foot, with letter carriers delivering letter mail door to door (to some but not all addresses). Canadians, from coast to coast to coast, continue to rely on Canada Post. Some important public activities – such as federal and provincial elections – would, currently, be almost impossible to run without Canada Post.

However, Canada Post is facing an existential crisis: It is effectively insolvent.

2.2 CUPW

CUPW has a long and proud history. One CUPW contribution stands out (but there are many others). In the 1960s and 1970s, the very idea of paid maternity leave was a distant dream for almost all Canadian workers. At midnight on June 30, 1981, more than 20,000 postal workers walked off their jobs – striking for better pay and job security to be sure – but also for the right of women to have children without losing their income. It took resilience, courage, and solidarity, and the strike lasted 42 days, but CUPW won: securing 17 weeks of paid maternity leave, setting a precedent that cascaded throughout Canadian society forever changing Canada – and for the better.

CUPW has 44,000 members who work at Canada Post. Urban employees are primarily responsible for mail processing, collection and delivery, and retail operations in urban areas. The Urban bargaining unit also represents employees who are responsible for maintaining the mail-processing equipment and Canada Post vehicles. RSMC bargaining unit members are responsible for the transportation and delivery of mail in rural and some suburban areas. All told, there are 22,500 routes, 462 depots, 22 processing plants and 5,800 corporate and franchise retail post offices. Canada Post serves Canadians from coast to coast to coast: It delivers to more than 17 million addresses.

There are three lines of business.

2.3 Three Lines of Business

2.4 Obligations

As a national postal service, Canada Post is obligated to fulfill Canada’s responsibilities under the Universal Postal Convention – an international treaty – signed by nearly 200 countries belonging to the Universal Postal Union. The treaty requires signatories to maintain basic customary postal service. This standard, known as the Universal Service Obligation (USO), has five core components:

• universal service, regardless of location
• affordability, with a uniform letter mail price, regardless of location/distance
• timely, regular service
• accessible service to everyone, regardless of location
• a quality of service to be maintained

Canada Post enjoys a statutory monopoly on the delivery of letter mail. This monopoly, which is referred to as the exclusive privilege, is set out in the Canada Post Corporation Act (Act).

2.5 Relevant Provisions of the Canada Post Corporation Act

The Act sets out the purpose of Canada Post:

5(1) The objects of the Corporation are

• (a) to establish and operate a postal service for the collection, transmission and delivery of messages, information, funds and goods both within Canada and between Canada and places outside Canada

…

(2) While maintaining basic customary postal service, the Corporation, in carrying out its objects, shall have regard to

…

(b) the need to conduct its operations on a self-sustaining financial basis while providing a standard of service that will meet the needs of the people of Canada and that is similar with respect to communities of the same size;

…

14(1) Subject to section 15, the Corporation has the sole and exclusive privilege of collecting, transmitting and delivering letters to the addressee thereof within Canada.

2.6 Relevant Provisions of the Canadian Postal Service Charter

The Postal Charter sets out the government’s service standard expectations: “The Government of Canada is committed to ensuring transparency in how Canada Post provides quality postal services to all Canadians, rural and urban, individuals and businesses, in a secure and financially self-sustaining manner.”^{Footnote 4} Simplistically stated, the Postal Charter is how the Government of Canada – the shareholder – sets Canada Post’s service standards.^{Footnote 5}

The Postal Charter, and the service standards it sets out, was implemented in 2009.^{Footnote 6} It is subject to government review every five years. The last review was in 2018. The quinquennial review is, therefore, overdue.

3.1 First-Class Letter Mail Decline

It has been a slow but steady burn: Starting with the telegraph, followed by the telephone, and then fax machines, technology has introduced new forms of competition that have corroded Canada Post’s exclusive privilege by giving customers greater choice. But digital communications, particularly email, messenger apps, and social media, completely upset the apple cart: Electronic substitution is now ubiquitous for both letter mail and, increasingly, marketing materials. Canada Post is losing market share year over year, particularly in tandem with labour disruptions, including the labour dispute that led to the appointment of this Commission. The volume of letter mail is down, and declining, as has been consistently the case for almost two decades.^{Footnote 7}

In 2006, Canada Post delivered 5.5 billion letters annually. In 2023, that number dropped to 2.2 billion, and projections indicate a continuing decline. Canada Post’s infrastructure is impressive: It delivers to more than 17 million addresses across the second-largest country in the world, but the physical plant was designed and built to deliver 5.5 billion letters a year and cannot be sustained with a volume of less than half that. In 2006, a smaller number of Canadian addresses were receiving an average of seven letters per week. In 2024, that average had declined to two letters per week, but the number of addresses had increased by more than 3 million between 2006 and 2023 to the current 17 million-plus. Put another way, fewer letters must now be delivered to more addresses. There is every reason to believe – and no reason not to – that the letter mail decline will continue and that this trend is irreversible: not a levelling off, but almost certain and eventual extinction.

This phenomenon is not unique to Canada. Letter mail volumes around the world are in decline. The Universal Postal Union – the United Nations agency for the postal sector – has reported that the volume of domestic letters worldwide fell from 432 billion in 2000 to 196 billion in 2024. In the United States, according to the United States Postal Service, first-class mail volumes fell from 103 billion in 2000 to 46 billion in 2023 (accompanied by almost as large a drop of advertising mail, also replaced by digital alternatives). The same story has been repeated in Europe, with the European Union reporting that letter volumes have decreased by 45% from 2012 to 2022. The situation is similar across the industrialized world.^{Footnote 8} The conclusion is inescapable that the exclusive privilege is now close to, if not entirely, irrelevant,^{Footnote 9} while the USO and the service obligations under the Postal Charter continue.

Financially sustainable letter mail delivery requires volume and population density. Sustainability is not possible with low and annually decreasing volumes accompanied by a growth in the number of addresses spread across our large country. Financial sustainability is problematic when low-cost urban letter mail delivery is evaporating and the volumes are no longer available to cross-subsidize the much more expensive lower-density deliveries to rural, remote, and Indigenous communities. Any return to sustainability must reflect this market reality. Candour and realism require recognition that daily door-to-door letter mail delivery is a historical anachronism with no (fiscally sustainable) future; more likely than not, no future at all.

3.2 Parcel Mail Decline

There is no mystery about what happened: events. The pandemic created an immediate increase in demand for e-commerce delivery from early in the morning to late at night, satisfying an insatiable consumer demand – it is now actually an expectation – for daily/same- or next-day delivery.

In 2019, Canada Post delivered 62% of Canada’s parcel market. In 2023, that number dropped to 29%, notwithstanding Canada Post’s efforts to increase capacity and improve service.^{Footnote 10} Between 2016 and 2020, the Royal Mail in the United Kingdom saw its share of the parcel market decline from 55% to 38%, followed by further declines of 12.5% and 21.2% in 2021–2022 and 2022–2023 (along with corresponding declines in revenue), leading to a total 2023 market share of 25%. The United States Postal Service’s market share is also down.^{Footnote 11}

Private sector competitors have almost completely taken over in Canada – especially its more profitable part, the extremely lucrative high-density urban and suburban areas – a market that was once dominated by Canada Post. The parcel market is completely deregulated with no real barriers to entry.

There are the international courier companies – FedEx, UPS, DHL, to name three – but there are major Canadian ones as well, for example, Purolator (owned by Canada Post) and Intelcom. There are literally thousands of local courier companies offering easy-to-access, quick, inexpensive, and reliable daily/overnight courier service.

FedEx in Canada employs 13,000 “team members” and has 1,200 authorized shipping centres, 285 drop boxes, 5,000 vehicles, 35 aircraft, and 331 intra-Canada flights. UPS has 13,000 employees working in and out of 63 facilities and a 3,000-vehicle delivery fleet. DHL is one of the largest international courier companies in the world, with 2,700 employees in Canada and an equity stake in Cargojet. Intelcom was founded in Quebec in 1986. It has 2,500 employees and hundreds of independent delivery “partners.” It offers delivery from 8 am to 9 pm, 7 days a week. Its drop-off locations never close. It annually delivers over 120 million parcels in Canada. Other companies are entering the market every year.^{Footnote 12} None of these companies subscribe to, or are bound by, the USO (although some of them claim to offer delivery to every Canadian address): They can charge what they want – subject to fiercely competitive market forces – and deliver where they choose (the most expensive, most profitable parts of the business). If the last mile is too expensive – although more and more courier companies are extending their reach farther and farther – they can leave that service to someone else, generally Canada Post. However, even these unprofitable and difficult-to-reach addresses cannot be taken for granted by Canada Post.^{Footnote 13}

Canada Post’s competitors want it all, and they are not standing still. Drones, autonomous vehicles and robotics are sure to soon play a part (or, at least, the prospect of them doing so cannot be dismissed as the underlying technologies rapidly advance).^{Footnote 14} For example, Amazon and Walmart are aggressively moving into the drone delivery space. Amazon has large ambitions. It aims to deliver 500 million packages a year by the end of the decade, with more than 50,000 items now available for drone delivery in markets in four American states. Shopify projects drone delivery to reach $10 billion by 2030. Drone technology is advancing rapidly: in capacity, flexibility, and ability to fly in inclement weather. This is not The Jetsons. This is tomorrow, or the day after. Predicting the future is usually a mug’s game, but Zipline and Wing will soon be household names.

Conventional parcel delivery is Canada Post’s mainstay. Projections indicate that the overall market will continue to grow, but delivering parcels competitively poses current and ongoing challenges. Parcels are heavy. They are bulky. They take up more space (than letter mail) in processing plants and on trucks. They require different purpose-driven sorting machinery and distribution facilities. The technology will also continue to evolve, requiring ongoing and substantial commitments for research, development, and capital costs. It is not a matter of build it and they will come. For example, in September 2023, Canada Post opened the Albert Jackson Processing Centre in Scarborough.

Covering some six CFL football fields, costing almost $500 million, this state-of-the-art facility has the capacity to sort more than 60,000 parcels an hour. Despite the investment and other improvements to parcel-sorting infrastructure, Canada Post’s share of the parcel market nevertheless continued to decline. Canada Post’s competitors are in a process of continual innovation, modernization and expansion. They have virtually unrestricted access to capital and are self-evidently committed to continual upgrading:

For example, UPS introduced a $500 million modernization and expansion plan in 2018. This included a 180,000 square foot expansion to its Montreal hub, a new facility in Kanata, and expanded package centres in Brampton, London and Edmonton. Last year, it opened a new $200 million facility in Caledon outside of Toronto. It claims this to be the largest and most technologically advanced facility in Canada. It is an 850,000 square foot facility, which is spread over 102.5 acres and is capable of sorting 35,000 packages an hour.

FedEx invested US$ 6.2 billion internationally in 2023. Its new bulky item facility in Memphis comprises 121,000 square metres, 17.7 kilometres of conveyor belts, and can process 56,000 items per hour. A new Canadian small-package sorting facility in Toronto was established in 2020, which is capable of sorting 20,000 items an hour, 7 days a week.

DHL invested 3.4 billion euros in property, plants and equipment in 2023. It opened its new $100 million Gateway facility in 2023. This expanded the facility from 50,000 square feet to 238,000 square feet, and increased its sort pace from 15,000 parcels an hour to 28,000 parcels per hour.^{Footnote 15}

Certain facts that must be acknowledged. The competing courier companies have the resources to invest in new technologies. They also have other competitive advantages, starting with lower labour costs. The non-unionized competitors have an even greater edge. Many of them rely on their drivers to supply their own vehicles. 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. There are also structural changes to the parcel delivery business under way.

Increasingly, large-volume merchants stock inventory closer to customers, thereby allowing for an asset-light physical plants in contrast to Canada Post’s bulky national infrastructure and delivery model. As well, e-commerce delivery businesses, together with third-party platforms, have contracts with multiple carriers and select the best price – and dynamic pricing is often a feature of these arrangements – for each parcel shipped from carriers competing at the individual parcel level. (Canada Post does not participate in these parcel auctions.) Amazon is actively working to reduce reliance on third-party delivery services, including Canada Post, by opening its own last-mile delivery stations across the country (five in 2024). Amazon offers a 6-hour delivery promise on more than 3 million items. Drop shipping may disrupt the business even further. Under this model – no retailer, no store, no employees, no warehouse, and no need for technical processing – a business sells products without ever even having them in stock. The customer orders the product; and the business forwards the order to the manufacturer, who ships the product directly to the customer.^{Footnote 16}

3.3 Takeaway

The market has fundamentally changed; decline in letter mail is irreversible (and continuing). The eventual extinction of the letter mail market is close to a given – volumes will be so low that offering daily letter mail delivery door-to-door would be commercially ridiculous – and it is Pollyannaish to think otherwise. Expansion of parcel delivery, however, provides an opportunity – although it is very far from a sure thing – for Canada Post to continue its USO and move toward sustainability. As discussed below, both Canada Post and CUPW agree that a parcel-centric Canada Post is its future (see D.14.2). They fundamentally disagree, however, about what should be done for Canada Post to effectively compete (and grow the business). The parties’ competing visions for the future of Canada Post, and their views on why bargaining failed, is set out in detail at Tab D.

4.1 CUPW

In CUPW’s view, Canada Post was not a private sector corporation. It was and remains a public service with a larger mission set out in the Act – including the exclusive privilege – and in the Postal Charter. Canada Post’s mission was to deliver to every Canadian address – the USO – but to do so as a public service, not as a for-profit corporation. That meant meeting the needs of the Canadian people while safeguarding the rights, working conditions, and invaluable contributions of CUPW members, and not by racing to the bottom by attempting to compete with existing and new courier competitors and their gigified jobs and substandard wages and working conditions. CUPW was not unaware of the challenges ahead: “The services provided and the nature of postal work have changed and continue to change,” it stated in its submission to the Industrial Inquiry. “We know that Canada Post is facing significant challenges – letter mail is declining, parcel shipping is more competitive and, as a result, revenues are down.”^{Footnote 17}

Even with market challenges, Canada Post must not, CUPW submitted, lose sight of its core responsibility: It should be a model employer, meaning delivering mail and parcels but also setting the standard for good, sustainable, and whenever possible, full-time jobs. Accordingly, in the recent collective-bargaining round, just like in previous ones, CUPW sought improvements to job security and to the other terms and conditions in the collective agreements. It was imperative that any benefits arising from productivity increases be equitably shared with employees.

CUPW strongly supported continuation of the moratoriums on closure of rural post offices and community mailbox conversions. Rural post offices played a role in prompting national unity and provided good jobs in high-unemployment regions, while the continuation of door-to-door delivery, in CUPW’s view, was a long-standing and well-worth-preserving feature of Canada Post, something that should be expanded – not contracted through an ill-advised and problematical expansion of a community mailbox regime that manifestly failed to meet the needs of the Canadian people.

CUPW did not accept Canada Post’s costings on savings arising out of eliminating either of these moratoriums. But the question was not strictly a financial one, and the impact of ending these moratoriums required much more than a superficial analysis of profit and loss. Any closure of post offices had to consider the mileage and environmental costs sure to follow as people had to drive long distances to obtain access to postal services. Canada Post and the Government of Canada could expect “massive public opposition” to ending these moratoriums if past history was any guide.^{Footnote 18} Likewise, any assessment of ending the moratorium on community mailbox conversions had to consider improvements to the Delivery Accommodation Program for the elderly and disabled, municipal charges (including for snow clearing, access ramps, and lighting), possibilities of slip and falls, break ins, and greater greenhouse gas emissions (as people drove to get their mail).

In its submissions, CUPW made clear that it would not engage in negotiating away hard-fought victories for job security and other collective agreement provisions; and, while it acknowledged that Canada Post faced some fiscal challenges, and that there was a market need for 7-day-a-week parcel delivery, Canada Post’s claims of fiscal distress as anything other than opportunistic; a pretext for unjustified concessionary bargaining: “The Union is prepared to work with the Corporation to roll out weekend, evening, and same-day parcel delivery services.”^{Footnote 19} But there was a condition on doing so: Existing collective agreement provisions had to be respected and improved. CUPW would never agree to the gigification of the workplace, or to gutting collective agreement provisions that were freely bargained. CUPW questioned Canada Post’s reluctance to work within the four corners of the collective agreement.

There was, CUPW insisted, an existing collective agreement architecture for Canada Post to introduce all the changes it said that it required. That was, CUPW suggested, the beginning and end of the matter: The parties should use pre-existing negotiated collective agreement provisions and/or negotiate changes as part of free collective bargaining. Instead, Canada Post was seeking changes that went well beyond what had been agreed to.

Making matters even worse, in CUPW’s submission, was that it had put forward a detailed and thoughtful plan to provide for weekend delivery using a full-time workforce. It even provided a “proof of concept and costing,”^{Footnote 20} yet Canada Post refused to engage, an inexplicable position since CUPW could prove that using part-timers would cost more than its full-time weekend workforce plan.^{Footnote 21} It was not just a question of savings, however. CUPW expressed the view that “preference should always be given to full-time jobs, wherever possible” as they “were central to Canada Post’s success.”^{Footnote 22} In fact, CUPW expressed the view “that the Corporation’s preference for flexibility should give way to the Union’s commitment to full-time employment and job security in that the Union’s proposal already makes a major concession in that it has agreed to the Corporation’s demand for weekend parcel delivery, including both Saturday and Sunday.”^{Footnote 23}

Furthermore, the fact that Canada Post was unwilling to pilot or study even one of its proposals on how to grow the business illustrated, to CUPW, that Canada Post was attempting to take advantage of overblown insolvency claims to secure transformative changes to the collective agreements – changes that it could never hope to successfully negotiate – and to do so in a process – this Commission – that CUPW fundamentally objected to as unconstitutional and unfair. (CUPW challenged the constitutionality of the CIRB referral and back-to-work direction but not – directly – the constitutionality of the appointment of the Commission.)

4.2 Canada Post

Canada Post was categorical. The financial situation was dire: It was insolvent and, but for the Government of Canada loan/line of credit, would have been unable to meet its obligations sometime in 2025. There was no ambiguity about its financial state, current and projected. The crisis was not manufactured; it had been long apparent for all to see, and it could no longer be ignored. Yet, in Canada Post’s view, CUPW would not adjust its bargaining demands to address the current and established situation, making it impossible to reach a collective agreement setting out a forward path.

Everything had changed but, in other ways, everything had stayed the same, in Canada Post’s submission. There was the USO, and, while there was the exclusive privilege, that could not be relied upon to provide the volume and revenue Canada Post once enjoyed to underwrite operations and even, in some earlier years, to generate profits. Courier company competition would not disappear; it was expected to grow, and the only plus to the equation was that overall parcel delivery volume was also expected to increase. Canada Post wanted to maintain and grow its parcel delivery share, but to do that, it needed to make changes. They would be modest and incremental changes, to start – weekend parcel delivery by part-time employees, capacity to make effective use of part-time, flexible, employees during the week, the ability to avoid trapped time and overtime, dynamic routing, and load levelling – with more transformative changes coming later: “Canada Post does not seek to accomplish everything at once. Rather, Canada Post’s focus is on the most effective solutions to its pressing challenges.”^{Footnote 24}

Also immediately required, in Canada Post’s submission, were changes to the Postal Charter to provide for realistic and sustainable delivery standards, an updated process for setting postage rates, and the end of the moratoriums on rural post office closures and community mailbox conversions. Ending the moratoriums would make a substantial dent to the growing annual deficits. In any event, whatever the reasons for their imposition, they could no longer be justified when the company was effectively insolvent. Canada Post elaborated.

In Canada Post’s view, the moratorium on rural post office closures made no sense. Because of the growth and expansion of Canadian cities, many rural post offices were now located in urban areas. The post office closure moratorium had long outlived any of its usefulness (assuming it was ever well-advised). Daily door-to-door letter carrier delivery – to a minority of Canadians – could not, Canada Post submitted, be justified given its high cost when Canada Post was teetering on the verge of collapse. It certainly could not be justified based on an average delivery per household of two letters a week.

7.1 The 2008 Advisory Panel

Commissioned by the federal government, the Strategic Review of the Canada Post Corporation reported to the Minister in December 2008, concluding that Canada Post’s “financial sustainability is uncertain at best.”^{Footnote 26} The panel observed that the postal market was in the throes of far-reaching change. The traditional letter mail market was a mature industry that had almost certainly peaked, with a likely slow but steady decline as electronic substitution and electronic communications gathered steam. E-commerce presented growth opportunities, however (eventually exploited by others). The panel reported many concerns about the future of Canada Post.

7.2 The 2013 Conference Board Report: The Future of Postal Service in Canada

This report, commissioned by Canada Post, correctly predicted significant volume declines and losses from operations, growing to an annual amount of $1 billion by 2020.^{Footnote 27}

7.3 The 2016 Task Force Review: Canada Post in the Digital Age

On May 5, 2016, the Minister of Public Services and Procurement Canada announced a review of Canada Post by the Task Force for the Canada Post Corporation Review (Task Force).^{Footnote 28} The mandate of the independent Task Force was to deliver a discussion paper – following consultations with stakeholders – outlining viable options for the future of Canada Post and to have this report serve as the basis for an informed public dialogue led by a committee of the House of Commons. The Task Force reported in September 2016, and among the issues it addressed was the sustainability of Canada Post.

Given that Canada Post, at the time, had reported profits in 17 of the previous 20 years, CUPW had argued in its submissions to the Task Force that Canada Post was not facing financial challenges. The Task Force disagreed. It pointed to an ongoing decline in letter mail volumes and other business pressures, such as growth in the number of addresses to which Canada Post was required to deliver. The exclusive privilege was no longer generating sufficient revenues to finance USO postal services.

The business model, the Task Force concluded, was no longer sustainable over the medium and long terms with projected annual losses of almost $800 million by 2026.^{Footnote 29} The exact projected number – $784 million – was, the Task Force concluded, “most likely at the low end of the reasonable range….”^{Footnote 30} Numerous factors contributed to the negative financial outlook – spelled out by the Task Force in its report – but, as noted, declining letter mail volume was at, or close to, the top of the list.

7.4 House of Commons Standing Committee on Government Operations and Estimates

The House of Commons Standing Committee on Government Operations and Estimates (Committee) reviewed the Task Force results and consulted Canadians on the future of Canada Post. It then issued its report: The Way Forward for Canada Post.^{Footnote 31}

Ernst & Young, the accounting firm hired by the Task Force to assess Canada Post’s current and future financial situation, testified before the Committee:

Looking ahead, the financial position’s projection to 2026 paints an unsustainable future, with over $700 million per year of ground-rate losses. Drivers for these negative results are multiple, but include the continuing mail erosion driven by electronic communication; inflationary cost pressures; the network growth linked to the Canadian population increase; competition, including new service providers, lower cost service providers, and disruptive technologies; and the funding requirements of the pension plan. Our analysis leads us to believe that Canada Post’s projected loss is at the optimistic end of the acceptable range of estimates; it could be higher (emphasis added in the citation).^{Footnote 32}

The Committee concluded:

… that the Corporation must make significant changes to honour its mandate and provide quality services that meet the needs of Canadians at a reasonable price and on a self-sustaining financial basis.^{Footnote 33}

7.5 Canada’s Postal Service: A Lifeline for Rural and Remote Communities

In December 2024, the Standing Committee on Government Operations and Estimates issued its latest report. While focused on maintaining service to remote, rural, and Indigenous communities, the report noted: “The competitive landscape has been deeply disrupted in recent years, and Canada Post must adapt to these changes.”^{Footnote 34}

7.6 Canada Post – Annual Reports

Canada Post’s most recent annual report – 2023 – pulled no punches. There were the losses, of course, $548 million in 2022 and $748 million in 2023:

Without changes to address the structural challenges with our operating model, we forecast larger, unsustainable losses in future years.

Even with Canada Post’s recently proposed stamp price increase, the Corporation projects that without additional borrowing and refinancing, it will fall below its required operating and reserve cash requirements by early 2025^{Footnote 35} (emphasis mine).

…

Canada Post’s financial situation is unsustainable. The Corporation has recorded significant annual losses since 2018, fuelled by rapid changes in the postal and parcel delivery sectors and legacy regulatory measures that impede the company’s ability to evolve and compete…Without changes and new operating parameters to address our challenges, we forecast larger and increasingly unsustainable losses in future years.^{Footnote 36}

…

Without additional borrowing and refinancing, we expect to fall below our required operating and reserve cash requirements by early 2025. The Corporation has current loans and borrowings of $1 billion, of which $500 million is due for repayment in July 2025. At least $1 billion in new borrowings or other liquidity measures are required for 2025, including refinancing $500 million in existing debt. In the current financial situation, at least $1 billion will also be needed in 2026 and each year afterward to maintain operations and meet our employee obligations.^{Footnote 37}

But for the health of the pension plan – and the contribution holiday – effective insolvency would have come earlier.

Notably, in its 2023 third-quarter update (before the 2023 annual report), Canada Post reported, “We are actively collaborating with our sole shareholder (the Government of Canada) to develop solutions aimed at addressing and alleviating liquidity pressures.”^{Footnote 38} There was no mystery about the existence of these publicly announced ongoing consultations between Canada Post and the Government of Canada leading to the January 2025 loan/line of credit announcement.

The only conclusion that can be drawn is that Canada Post’s financial circumstances – and the main causes of them – have been known for years. Impending insolvency was forecast in 2023, leading to solvency relief discussions in 2024 leading to the Government of Canada’s announcement in January 2025. It was based on the government’s determination that without the cash infusion, Canada Post could not continue to operate: “Providing this cash injection will prevent insolvency and ensure the continuity of postal services,” is what the Government of Canada said when it announced the loan/line of credit. Skepticism is one thing. But there is no basis to request independent third-party review. The financial statements are audited. They have been reviewed by officials at the Department of Finance and approved by the Auditor General of Canada. They have been prepared in accordance with generally accepted accounting principles. The notion that the crisis was manufactured is at odds with the objective evidence, all of which is open and transparent. Every single one of CUPW’s enumerated concerns about the financial statements were addressed and convincingly rebutted during the Commission hearings. At the end of the day, CUPW was left with its suspicions, but nothing to show for them.

A few other observations are necessary. This situation is far from the case of an employer pleading poverty to justify collective-bargaining concessions, and then not providing access to the books. I am not persuaded by CUPW’s assertion that Canada Post’s mismanagement and incompetence are the reasons for the current financial situation. Even assuming that the company made both good and bad business decisions,^{Footnote 39} the principal reasons for the financial losses are easy to identify: There was the decline of letter mail caused by electronic substitution and the rise of parcel mail, now mostly delivered by competitors; collective agreement work rules that restrict Canada Post from exercising basic management rights such as assigning existing employees additional work when they have finished their assigned tasks (trapped time) and hiring part-time employees for weekend and other high-volume periods; and government-imposed fetters, namely the moratoriums on closing rural post offices and ending community mailbox conversions (which need to be reversed if Canada Post is to have any kind of financially sustainable future).

There was once a balance achieved by the marriage of the exclusive privilege and the USO that allowed Canada Post over a very long time to achieve a modicum of financial sustainability; indeed, profits in many years. The exclusive privilege is now almost completely meaningless and will soon be completely irrelevant because the decline in letter mail is almost certainly irreversible. A financially sustainable future will be challenging, but the current trajectory, absent change, leads in only one direction: continuing and increasing annual deficits. There is, however, a possible forward path. Yes, to the continuation of the USO: continued delivery of letter mail, albeit declining, and parcels, to every single Canadian address; but in a way that makes sense for today and tomorrow, not yesterday. That is in the national interest. The Government of Canada, Canada Post, and CUPW must blaze a new trail.

This will not be easy.

8.1 Why Collective Bargaining Failed

The parties spent hundreds of days in bilateral collective bargaining but could not agree on terms to renew their collective agreements. They could not even agree with the assistance of the expert, experienced, and extremely effective mediators from Labour Canada. Instead of resolving their differences there was a five-week labour dispute that ended only with the intervention of the Minister of Labour. The reasons for stalemate are both simple and complicated. The parties have diametrically opposed world views and assessments of the challenges to be faced and the solutions to them.

The parties will have another opportunity to reach a collective agreement on or after May 22, 2025. CUPW has an immediate choice: continue to adhere to objectively debunked claims about Canada Post’s financial state – and the challenges facing letter mail and parcel delivery – or acknowledge that Canada Post’s financial situation requires an immediate pivot to its overall bargaining approach. It must also accept that Canada Post does not exist to provide CUPW members with employment. It exists for one reason: to deliver letter mail and parcels to the people of Canada.

There are several areas of agreement, however.

The parties agree that letter mail volume has declined and will continue to do so. CUPW begrudgingly admits that the decline in letter mail and parcel volumes has had an impact on Canada Post’s fiscal situation: CUPW also acknowledges that Canada Post has “a revenue generating problem….”^{Footnote 43} The parties agree that offering weekend parcel delivery is the immediate priority; without it, Canada Post’s market share will continue to decline.

In their collective bargaining leading up to the labour dispute, the parties were able to agree, or partially agree, on many items both substantive and housekeeping. In the January and March Commission-facilitated mediation sessions, significant progress was made on other items – albeit subject to agreement on a whole – in particular, large parts of the Rural and Suburban Mail Carriers (RSMC) collective agreement and revisions to the Short-Term Disability Plan (STDP).

Agreement ends here. There is a polarization in positions and there is an impasse, reflected by the 200 days of bargaining that did not lead to an agreement. This is not normative even for complicated collective-bargaining disputes where significant change is sought by either or both parties. The impasse led to the labour dispute. That same impasse led to a failure to reach agreement in two days of mediation before the Commission began hearings, and another two days after. All this bargaining took place in the shadow of a financial crisis, but the parties could not find a way to focus on fixing it. One would have thought that doing so should have been their number one shared priority.

Canada Post is insistent that a process eventually leading to transformative change must begin. For Canada Post, the situation is existential. Unless it can reorient and adjust to the new business reality brought about by electronic substitution and competition in the parcel market, it will be challenged in meeting its USO and the requirements of the Postal Charter without continuing and growing deficits. Business as usual cannot, in its view, be the outcome if Canada Post is to have a future. For its part, CUPW is intent on defending gains made over decades of collective bargaining, which is completely understandable. Between these opposites, a common ground must eventually be found: one that recognizes that both parties have legitimate interests. Reality must nevertheless be acknowledged and addressed, beginning with acceptance of financial reality.

CUPW rejects Canada Post’s claim that the financial crisis is an existential one and, but for the January 2025 Government of Canada bailout, that it would have been unable to meet its current financial obligations. Without ever actually persuasively pointing to anything offside in the audited – and heavily scrutinized – books, CUPW asserts that it has well-founded reasons to greet Canada Post’s fiscal reports with genuine skepticism. CUPW’s view is reinforced by Canada Post not answering some of its detailed collective-bargaining costing questions or providing any transparency into the discussions leading to the Government of Canada’s $1 billion-plus loan. In these circumstances, CUPW calls for an independent financial review to get to the truth. CUPW’s view is summed up by its reference to Canada Post’s financial crisis as a “financial crisis” – the quotation marks indicating its rejection of this established fact.^{Footnote 44} As well, in CUPW’s view, if there are problems, addressing them is up to Canada Post, and the cost of doing so should not be borne by its membership (although any savings achieved by the introduction of technological change should be shared with them). For the reasons already given, the financial situation has been accurately described and insolvency is real. Focusing on the past and apportioning blame would not be productive. All that matters is fixing the problem or making best efforts to try to do so. That should be a shared interest of the parties.

8.2 Existing Provisions of the Collective Agreement Not the Answer

CUPW adheres to the notion that the current collective agreements provide Canada Post with the tools it needs to introduce weekend parcel delivery (and achieve flexibility at other times). This is untenable. The parties do not have an established track record of using existing collective agreement provisions to pilot and introduce needed changes. There is no reason for any confidence whatsoever that going forward the existing fractious and litigious environment will improve.

The route restructure process – employing hundreds of Canada Post employees to study and implement route changes in a process that can take years to complete – is not suited for the current situation, which requires daily adjustments as volumes change. Appendix S – the Parcel Delivery Model (see section D.2.2.9) – mandates consultation and agreement and is subject to so many conditions and guardrails to make it unsatisfactory as an answer to the flexibility/parcel delivery problem (especially as it limits Canada Post from delivering all its products at the same time in one truck during the week). Appendix T – the Service Expansion and Innovation and Change Committee (D.1.8.1) – might have its uses, but addressing the immediate situation is not one of them. Appendix AA – the Collection and Delivery Operating Model (D.1.9.1) – is a proven failure with both parties pointing their fingers at each other for the demise of the Champlain Depot pilot project (D.1.9)). Appendix JJ – the Pickup and Parcel Delivery Outside the Regular Daily Delivery Network (D.2.2.8) – is of almost no value whatsoever; its use confined to “new product and/or service offerings.” There is no practical way for Canada Post to segregate new products and/or service offerings to be delivered on weekends. It is hard to believe that anyone would ever design and then agree on this kind of delivery model. Even if that segregation task could be accomplished – which it probably cannot – it would still leave Canada Post unable to offer 7-day-a-week parcel delivery in any commercially sensible fashion. Appendix QQ – Letter Carrier Route Volume Updates – allows for route modifications, but not in a manner reflecting that volumes can go both up and down.

In these circumstances, insisting – as CUPW does – that existing collective agreement provisions allow for necessary changes such as introduction of weekend parcel delivery and flex arrangements during the week is untrue and unproductive. At a minimum, existing provisions, as outlined above, are so time consuming, and have so many conditions, fetters, and guardrails, to make them manifestly unsuitable and, more importantly, unworkable in addressing current challenges. CUPW’s proposal, made at the February Commission hearings, to introduce weekend parcel delivery with full-time employees, missed the mark. Instead of providing Canada Post with the flexibility it needs to adjust the workforce to reflect volumes, if adopted, it would have almost certainly introduced expensive inefficiencies, the least of which would have been more trapped time. The reason why employers generally rely on part-time and casual employees is to provide them with the opportunity to adjust staffing to meet evolving needs, something which is impossible with a full-time workforce with a guaranteed workweek. This should go without saying: Using a staffing mix – full-time, part-time, and casual – to avoid overtime is a normative feature of every single business where volumes and staffing needs fluctuate. Overtime is not normally an employee right; it is an employer last resort.

Accordingly, CUPW’s claim that the tools are already there, along with its complicated and counterintuitive proposal to hire more full-time employees to work full-time on weekends, leads to a finding that CUPW is defending the status quo – which would be understandable if Canada Post were not effectively insolvent – and sidestepping the key issues, which are the urgent need to appropriately address financial sustainability by finding some common ground on how to introduce 7-day-a-week parcel delivery and other necessary delivery-flexibility provisions. Note must, unfortunately, be made of CUPW’s submission that it had made a “major concession in that it has agreed to the Corporation’s demand for weekend parcel delivery, including both Saturday and Sunday.”^{Footnote 45} This “major concession” is a linchpin to the survival of Canada Post, not to mention the jobs of the men and women – the CUPW members – who work there.

8.3 “Growing” the Business Is Not the Answer

CUPW’s proposals to grow the business – and all its suggestions for one reason or another and to a greater and lesser extent – have a close to complete air of unreality (even if some dated polling results indicate varying degrees of public support when some of them were presented in the abstract). CUPW proposed a buffet of potential projects, described by CUPW National President Jan Simpson as visionary, but all of which require further study, costings, review and pilot projects.

Even assuming, for the sake of argument, that some of CUPW’s proposals had promise, there is an immediate need to reorient the core business to facilitate 7-day-a-week parcel delivery and to make best use of its employees, starting by having the ability to reassign work so that employees work the hours for which they are paid. CUPW’s views about trapped time and the practical inabilities of Canada Post to reassign work are not tenable – loads can be levelled in the morning before letter carriers begin their routes – nor is its proposal to hire more full-time employees to deliver in a volume-variable environment. Dynamic routing is a thing that all courier companies do, except Canada Post.

The timing may never be right, but now is not the time to squander scarce resources on studying and piloting, to give three extreme examples of CUPW proposals: (1) introducing seniors check-ins (where provincial homecare is already in place), (2) establishing artisanal markets at postal stations, or (3) transforming postal stations into community social hubs. Launching an e-commerce platform marketplace to support small- and medium-sized business in Canada is not a credible proposition in a marketplace already dominated by existing providers – one, in particular – of this very service. The same observation is made about grocery delivery. The market is saturated.

In other countries, postal banking is well established, and profitable. Canadians, however, increasingly bank on their phones. More importantly, it is hard to imagine thinking that it is a good idea for an effectively insolvent business to expand into non-core unproven activities with no market and revenue projections, especially something like banking and insurance, where Canadians are more than well served. (And to the extent that some Canadians do not have access to banking and other financial services, that issue will not likely be resolved by making them available at the local post office). Canadian banks and trust companies are closing branches. What possible reason could there be to turn thousands of post office stations into financial institutions, even if the many other challenges of entering this heavily regulated mature moated business could somehow be surmounted? (Canada Post’s limited foray into offering financial services is perplexing when it is struggling financially; and initial reports about these efforts hardly inspire confidence.^{Footnote 46}) Many of CUPW’s proposals are not new; they were canvassed, and some even adopted as recommendations, in the 2016 Committee review.

Bargaining largely failed because one party – CUPW – is defending business as usual, and wants to improve on the status quo with, for example, further job security enhancements and even better than best in class total compensation and terms and conditions of employment. It insists that Canada Post should be a model employer and sets out in detail what that would look like (See D.1 at Tab D). The other party, Canada Post, says that while transformative change is the long-term goal, unless the cash hemorrhage is staunched, and weekend parcel delivery and other staffing flexibility measures are introduced, together with the end of the moratoriums on rural post office closures and community mailbox conversions, there will be no long term (assuming, of course, that there are limits to government support) (D.2). Often parties to a collective agreement can find a meeting place somewhere between their bargaining positions. Not this time. These parties are at an impasse.

9.1 The Financial Situation of Canada Post

The first matter that needs to be addressed is the financial situation of Canada Post. The only conclusion that can be drawn is that Canada Post is, for practical purposes, insolvent, and a return to Canada Post operating on a self-sustaining basis – while desirable – is, at best, a long-term project. In the meantime, Canada Post cannot be viewed as a business, at least not a viable one.

The Act requires that Canada Post “conduct its operations on a self-sustaining basis while providing a standard of service that will meet the needs of the people of Canada and that is similar with respect to communities of the same size.” As noted above, the statutory twinning of these two objectives, even if it once made sense, no longer does so leading to the conclusion that the prospect of compliance with the Act is remote. Letter mail is going, if not gone, and the competitors for the parcel business are here to stay. The operating assumption must be that a goal of financial sustainability is currently aspirational. Although Canada Post was once a business and a public service, it is now only a public service. It is one worth preserving because many businesses and individuals rely on it including Canadians in rural, remote, and Indigenous communities. But preserving it – if the Government of Canada does not have a continuing appetite to indefinitely maintain the status quo and to fund the inevitably increasing deficits that would accompany doing so – require hard conversations about what Canadians want and what Canada can afford. Part of that conversation must include reaching agreement, or at least setting a goalpost, about what exactly is meant by Canada Post operating on a self-sustaining basis. Does that mean full cost recovery, or just some?

These conversations cannot be based on nostalgia for a bygone day of Eaton’s catalogues, Christmas cards displayed on the fireplace mantel, and mailboxes brimming with welcome personal letters and unwelcome bills (wistful remembrances living on in the hearts and minds of a diminishing number of Canadians), but on objective reality about what needs to be done in the short, medium, and long term to make Canada Post as efficient as possible so that it can continue to serve its national purpose of delivering to every Canadian address consistent with a continuing USO and a revamped Postal Charter.

While CUPW framed its submissions more broadly, I agree with – and endorse – the following CUPW conclusions:

“[T]he best form of job security comes with offering valuable services to the public.”^{Footnote 47}

Although innovation and diversification have helped some postal operators, the core of the postal business remains rooted in mail and parcels. For Canada Post, managing this core effectively while adapting to changing market demands (weekend, evening, and same-day delivery) can unlock substantial value.^{Footnote 48}

9.2 Canada Post’s Expressed Need to Diversify and/or Alter Its Delivery Models in the Face of Current Business Demands

9.3 The Viability of the Business as It Is Currently Configured

The business is not viable as currently configured. The business is effectively insolvent. The work rules are one part of it. The moratoriums on rural post office closures and community mailbox conversions are another. These two moratoriums reflect continuing fidelity to a 19th- and 20th-century vision of Canada Post, not one grounded in the realities of the 21st century. The moratorium on community mailbox conversions came in 2015: Canada Post was “advised” by the Government of Canada to suspend its conversion program. This direction from the shareholder was formalized in a mandate letter from the Minister of Public Services and Procurement to the incoming chair of the Canada Post Board of Directors on January 24, 2018:

Ending the Program of Converting Door-to-door Delivery to Community Mailboxes

First and foremost, as we committed to Canadians, the Government is ending the program to convert door-to-door delivery to community mailboxes. Door to door delivery will continue for households continuing to receive it.^{Footnote 50}

Whatever the reasons underlying the imposition of the two moratoriums, the fact remains that they are now completely inconsistent with achieving financial sustainability (nor are they justified on any objective analysis, given the decline in letter mail and the savings opportunities that ending the moratoriums will provide). The Government of Canada decided to impose the moratoriums. They are not the result of collective bargaining. The Government of Canada can decide to remove them.

Closing some rural post offices would obviously be politically fraught. Even with public consultation, it is more likely than not that local communities will strenuously object, as will the union: “CUPW, with its labour allies, the support of rural organizations, pensioners, students and our political allies will fight any attempt to close offices.”^{Footnote 51} Inevitably, there will be a human cost that can, and should be, ameliorated by fair and appropriate arrangements as negotiated by the parties. Some of these decisions will be easier: There are many locations once classified as rural that are now urban.

There is no case to be made – other than CUPW’s model public employer case – that franchising these services – that is, closing once rural, now suburban post offices – to drug stores and other places where Canadians shop – is not a smart and practical business decision. (Political costs are, however, another matter.) Some years ago, it was decided otherwise (and CUPW was, and remains, in complete agreement).

The case for community mailbox conversion is even stronger. As Canada Post noted in its submissions, for the past 40 years, homes built in new developments have received delivery to community mailboxes; there have been no new addresses added to door-to-door delivery. Meanwhile, some 40% of delivery costs go to serving fewer than 25% of Canadian addresses. Delivery to the door costs 75% more than delivery to a community mailbox ($284 per address vs. $162).^{Footnote 52}

Urban Canadians walk or drive or take public transit to corner mail boxes and to post offices – usually in drug stores – to purchase stamps and arrange for parcel delivery. Many suburban citizens walk to their community mailbox. CUPW objects to this – it disputes the potential savings and points to access concerns (seniors and disabled persons), security concerns (theft and vandalism), environmental concerns (more greenhouse gas), and other downsides (which it outlined in its submissions).

CUPW prefers delivery methods “that do not require a risky trip down icy sidewalks to obtain the mail.”^{Footnote 53} To be sure, slip and falls are a problem faced disproportionately by the elderly, but that risk exists whether travelling to a community mailbox or anywhere else. In another example, CUPW asserts that community mailboxes have “resulted in reduced property values and depressed the price of houses located near them.”^{Footnote 54} CUPW has a long list of other reasons for its opposition to ending the moratorium on community mailbox conversions but never addresses one fundamental fact: Letter mail is declining year over year to a current level per address of two letters a week. No one can seriously believe that it is a wise expenditure of public funds to incur a deficit to support this volume or, even worse, to support the door-to-door delivery of mass- marketing materials.

The overall context also matters, and that is the magnitude of the problem that needs to be addressed if Canada Post is to have a future. Obviously, placement/location of community mailboxes will have to be done in conjunction with municipal officials after considering the views of residents, accessibility, impact on traffic, parking, clearing of snow, lighting, security, et cetera. These planning challenges are not insurmountable (as their ongoing placement in new suburban developments makes perfectly clear). The existing Delivery Accommodation Program for seniors, the disabled, and other vulnerable persons requires review and will need to be maintained and possibly enhanced (and temporary measures made available, as appropriate). But there is no reason why urban Canadians, like those who live in suburban areas, cannot make their way to a community mailbox to pick up their (increasingly fewer) letters and their packages. There is a Canada Post App that notifies recipients when a parcel has been delivered to a community mailbox. Convenient as home delivery? No. Normative for most Canadians? Yes. Politically popular? Yes, and no. It depends on who you ask.

Had there been different decisions and these moratoriums not imposed, the current situation would almost certainly be different (and so would Canada Post). The potential rewards of ending both moratoriums? Making a major contribution toward preserving a vital Canadian institution. The numbers speak for themselves.

9.4 The Moratoriums

9.5 The Union’s Negotiated Commitments to Job Security and Full-Time Employment

For CUPW, job security is sacrosanct. It was hard fought over many years. In 1975, CUPW members negotiated – with Canada Post – protections against technological change. Article 53 of the Urban Collective Agreement, negotiated later, provides CUPW members with close to complete protection against layoff:

53.01 There shall be no lay-off of any regular employee who was employed in the bargaining unit as of June 1, 2020 provided the employee agrees to be displaced to another position in accordance with the procedure set forth hereinafter. The same shall apply to any other employee who becomes a regular employee after June 1, 2020 and who has five (5) years or more of continuous employment.

53.02 A regular employee not covered by clause 53.01 will not be laid off provided the employee agrees to be displaced to another position in accordance with the procedure set forth hereinafter.

Canada Post agreed to this language. It is a contractual term. CUPW is fully entitled to rely on it and enforce it. Canada Post might no longer like this provision, but it agreed to it. It is a legal obligation. Agreements made in collective bargaining must be given effect. That is a cardinal principle of Canadian labour law. Canada Post wants the ability to adjust its workforce, but it must negotiate this (or find workarounds such as agreements with CUPW about voluntary exit and early retirement incentives including pension bridging).

9.6 The Need to Protect the Health and Safety of Employees

It quickly became apparent over the course of the Commission that the workplace culture at Canada Post is challenging. This point was certainly reflected in many hundreds of individual submissions. CUPW insists that management is indifferent to legitimate health and safety concerns and actively attempts to suppress workplace injury claims. To describe the workplace culture as toxic may be an overstatement. But there are clearly issues that require attention, including examination of CUPW’s concerns – and claims – about workplace health and safety. Although part of the terms of reference, the need to protect health and safety was not put into focus in the parties’ submissions or at the hearings.

To the extent that my recommendation – below – is accepted to rescind the moratorium on community mailbox conversions, that will inevitably decrease injuries, many of which are sustained on letter carrier routes. Likewise, load levelling and dynamic routing will limit overtime (meaning reducing delivery of letter mail at night, when there is a greater prospect of injury).

10.1 Final Offer Vote

This is the option under the Canada Labour Code: where the Minister may direct that Canada Post’s final offer be put to employees in the bargaining unit, and, if a majority accept the offer, the terms of the offer become the collective agreement and any strike/lockout activity must end. Of course, if the offer is rejected, the strike/lockout would continue. The parties (or Minister, if he or she were to intervene) would have to find some other way to resolve the dispute.

10.2 Interest Arbitration

The parties can at any time voluntarily agree to interest arbitration: before a strike/lockout, or after a strike/lockout has commenced. Under interest arbitration, a board – either consensually selected by the parties or appointed by government – would determine the content of the collective agreement.

If the parties were unwilling to agree to interest arbitration, the Minister may decide under the Canada Labour Code to direct interest arbitration. I note that whether the Minister has this authority is currently subject to legal challenge. Alternatively, and as has been done in the past, Parliament could impose interest arbitration. This, too, would likely be subject to legal challenge.

The interest arbitration option would ensure labour stability. Interest arbitration – and this is well known – is often a conservative process, one that generally shies away from imposing structural change. It is received wisdom that major change is best freely negotiated in the give-and-take of free collective bargaining (which may be aspirational for these parties). To pass constitutional muster, and meet the test of fairness and neutrality, any imposed interest arbitration process must preserve the independence of the arbitration board, and terms of reference must be carefully drawn to balance rights and interests. Having said all this, it is not apparent to me that interest arbitration will, or can, successfully address the issues in this Report. (And some of them, such as the recommendations to remove the moratoriums on rural post office closures and community mailbox conversions, are beyond the scope of collective bargaining and interest arbitration, although their impacts would need to be addressed at the bargaining table.)

10.3 Strike/Lockout

The third option is strike/lockout. For its part, CUPW is insistent that its constitutional right to strike should not be infringed. It also insists that when the Government of Canada does not interfere in the collective-bargaining process, it is able to achieve freely negotiated collective agreements with Canada Post.

Given the nature of the issues, and the analysis of them set out in this Report, it may well be that strike/lockout is the only way in which the structural changes and trade-offs necessary for the survival of Canada Post can be reached. There is no doubt that if a strike/lockout were allowed to run its course, it could very well lead to the permanent desertion of many more letter mail and parcel customers, making it impossible – absent continuing and increasing government support – for Canada Post to continue operations (without incurring massive and growing deficits). It could very well mean the end of Canada Post – there is a tipping point – even if collective agreements are eventually reached. At present, the parties are unable to agree on what must obviously be done. However, it is the nature of collective bargaining that this dynamic can change (and may indeed do so between date of submission and release of this Report). For this reason, if strike/lockout is to be the route going forward, in my view government should make clear at the outset that it will not be interfering and that it is the responsibility of Canada Post and CUPW to mutually agree on the changes that must be made for Canada Post to keep operating (knowing what hangs in the balance if they fail to do so). One final point: Government intervention – by outright engagement, or by the behind-the-scenes direction from the shareholder, to prevent or preclude labour disputes – has, to some degree, contributed to the current situation.

Why These Recommendations

My recommendations have been designed to respond to the present problem: Arrest and then reverse the growing financial losses by putting into place the necessary structural changes – within the collective agreement and in the direct control of the parties – and outside the collective agreement – and in direct control of the Government of Canada. The parties need to make changes to their collective agreements: They must allow for the flexible use of part-time employees during the week and on weekends. Not gigified jobs, but good jobs, attractive jobs, with employees who come under the umbrella of the applicable collective agreement with normative terms and conditions of employment. Existing collective agreement provisions do not provide for this. Management must have the ability to load level and introduce dynamic routing so that employees are most efficiently deployed, while trapped time must be addressed so that the employer can ensure that employees work the hours that they are paid.

The Government of Canada introduced the moratoriums on rural post office closures and on community mailbox conversions. These two decisions, if reversed, will make an immediate contribution to improving Canada Post’s bottom line and can be designed to provide Canadians with appropriate access to postal stations (including franchised outlets), and continuing letter mail and parcel delivery. Many of the formerly rural post offices are now urban, making that part of the rural post office closure moratorium completely inexplicable. As for door-to-door mail delivery for a quarter of the population at an enhanced cost, it is a no longer affordable luxury when letter mail volumes have declined on average to two letters a week per address. Residential letter mail delivery should continue, but the frequency and mode of delivery must change. Given the current crisis – which it is – growing the business does not seem timely or opportune.

If implemented, the Report’s recommendations that follow may return Canada Post to some degree of financial sustainability so that it can continue the USO – both letter mail and parcels – but in a manner that reflects 2025 realities of disappearing letter mail and a highly competitive parcel delivery courier environment. The world has changed, and both parties must evolve and adapt. Tinkering with the status quo is not an option.

Canada Post must accept that the turnaround cannot occur overnight. It must proclaim its place as a vital Canadian not-for-profit public service, one that will continue to deliver letter mail, and one that will offer 7-day-a-week parcel delivery, all to meet the continuing needs of the population. As it works with its main union partner, it must proceed respectfully and deliberately, and always cognizant that CUPW members have bargaining rights and have bargained rights – there are contractual commitments – that are best modernized through free collective bargaining.

CUPW is a proud union. The strike that CUPW launched on June 30, 1981, introduced widespread paid maternity leave and changed the Canadian workplace landscape – and Canadian society – for the better. Looking back, all Canadians owe CUPW a debt of gratitude. The same could be said for CUPW’s advocacy on pay equity, occupational health and safety, and the right to strike. CUPW is very capable of adapting in a way that ensures the survival of the postal service in Canada, and its membership. It must not rigidly cling to a model that is effectively insolvent, without contemplation of alternatives that safeguard the continuation of letter mail and parcel delivery in the hands of CUPW members. Many of the individual emails I received from CUPW members showed me that the pride they take in their work is deep and genuine (see Tab C). It is time for CUPW to embrace a collaborative approach to retaining delivery in public hands by bargaining changes to their collective agreements that permit Canada Post to survive (and the jobs of CUPW members that go along with it).

I accept CUPW does not see itself as having a mandate to negotiate what it has so far very narrowly construed as concessions. I would urge the union to consider the moment we are in. The public service CUPW’s members proudly deliver is on the brink of collapse. The union has recognized the incontrovertible decline in letter mail delivery, and the fierce competition from the private sector in parcel delivery. There is a generational opportunity for re-invention here, and it is firmly in the hands of a union that has in the past broken new ground and shown great courage.

To ensure continuation of the Post Office, and the jobs of union members, CUPW must wrestle with the critical issues identified in this Report. It will be very difficult for CUPW to accept the flexibility measures that Canada Post needs to continue. Ending the moratoriums on rural post office closures and on community mailbox conversions – and the jobs that will inevitably be lost in the result – is a bitter pill, assuming this recommendation is accepted and implemented. It will be hard to swallow. CUPW can fight these inevitable changes if it wishes; or it can it negotiate the best possible terms to safeguard the rights and interests of its members. It is not an exaggeration to say that without an efficiency overhaul, letter mail delivery in Canada is marching toward extinction. The situation in Denmark – notwithstanding the differences between Denmark and Canada – is a cautionary tale that one ignores at their peril. Without an efficiency overhaul, Canada Post will be unable to retain, much less grow, its share of the parcel delivery market. CUPW should bring to bear all the skill and smarts it has repeatedly demonstrated through its storied history in working to evolve the Post Office. The payoff for that is preserving this vital Canadian institution.

The Recommendations

1. Amend the Postal Charter. It cannot continue to require impossible-to-meet delivery standards. Daily door-to-door letter mail delivery for individual addresses should be phased out and community mailboxes established wherever practicable. Daily delivery to businesses should be maintained.
2. The moratoriums on rural post office closures and community mailbox conversions should be lifted. There is no persuasive case for a moratorium on closure of once rural, now urban, post offices. Canada Post already has the Delivery Accommodation Program in place for Canadians who cannot access community mailboxes. It should be reviewed and, if need be, enhanced, and it should continue.
3. Include in the two collective agreements all items agreed to in collective bargaining prior to the labour dispute. Parties should attempt to narrow differences in all partially agreed-upon items. New collective agreements should include and reflect tentative agreements (subject to agreement as a whole) reached in Commission-facilitated mediation (RSMC and STDP).
4. Negotiate changes to the collective agreements. 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. These employees should be paid the same rates and be subject to the same terms and conditions as regular employees, including access to pro rata benefits, or payments in lieu, and pension. Priority for these positions should be given to existing employees.
5. Negotiate changes to the Urban collective agreement. There is no justification for collective agreement provisions that preclude an employer from assigning work for hours already paid (except by voluntary overtime).
6. Negotiate changes to the collective agreements. Pilot and then introduce dynamic routing. Canada Post must also be able to change routes daily to reflect volumes to avoid trapped time and overtime.
7. Amend the time-consuming approval process for postage increases.

All of which are respectfully submitted.

DATED at Toronto this 15th day of May 2025.

“William Kaplan”

William Kaplan, Commissioner

B.5.1 From Current and Former CUPW Members and Other Interested Persons

These individual submissions identified and discussed a long list of concerns about the way the corporation was run and its (mis)treatment of employees (Canada Post was top heavy, management received unearned and undeserved bonuses, employee wages were unfair, there was a toxic work culture including management indifference to health and safety and workplace injuries along with an absence of work/life balance, etc.). There were many suggestions for improving the union-management relationship (for example, enhancing closer collaboration between the parties by involving the union and its members in decision making). Almost 200 individuals urged that Canada Post continue to be subsidized by government and expressed opposition to privatization. There were many calls for an independent audit into Canada Post’s finances and suggestions made that Canada Post be declared an essential service. Many individuals urged increasing, not reducing, services to rural, remote, and Indigenous communities and establishing exclusive rights to last-mile delivery. It was recommended that resources be directed to improving employment practices (both on entry and departure, including the possibility of hiring retirees in peak periods and buying out employees close to retirement). There was a widespread consensus that the two moratoriums should be maintained (and where there were existing community mailboxes that door-to-door delivery be restored). Many of these submissions recommended that CUPW’s proposals for growing the business be implemented (adding new suggestions such as offering currency exchange at post offices and Canada Post cryptocurrency). Environmental sustainability and electrification of the fleet was encouraged.

B.5.2 From Others

A much smaller number of individual submissions urged Canada Post to focus on its core business, increase its hours of service and delivery frequency, create part-time positions to respond to volume, more efficiently organize delivery routes, and establish more community mailboxes.

D.1.1 Why Did Bargaining Fail

The answer to this question, in CUPW’s opinion, was straightforward. Collective bargaining failed, and a 32-day strike ensued, notwithstanding more than 200 days of negotiations and the active assistance of federal mediators, because Canada Post was indifferent and unresponsive to its legitimate bargaining demands and its productive and workable ideas about how best to move forward:

CUPW’s original proposals included improvements to wages to make up for the recent spike in inflation. The Union also sought improved staffing provisions to address staffing shortages and the Corporation’s overreliance on temporary and part-time workers; improved protections against technological change; measures to protect the bargaining unit from the contracting out of its work; improved rights for temporary workers; and improvements to the group benefits plan, as well as service expansion ideas that would generate new revenue streams.^{Footnote 60}

In marked contrast, CUPW observed, Canada Post sought rollbacks, concessions, and multiple deep-seated transformative changes to the Urban and to the RSMC collective agreements, including work and staffing rules, all supposedly justified by its financial circumstances: “No union or worker in Canada would accept such proposals.”^{Footnote 61} The concessions Canada Post sought included:

… a two-tier pension plan with future employees forced onto a defined contribution plan; a “flexible benefits” plan that would force our most vulnerable members to pay higher premiums to cover their medical needs; allowing management to use software installed in all vehicles to monitor and discipline workers for alleged health and safety violations; the elimination of night recovery leave for workers who work night shifts; the imposition of a vacation “blackout” period, preventing letter carriers and RSMCs from scheduling vacation during the Christmas period; the elimination of marriage leave; the elimination of the 5-minute wash-up period; less vacation leave entitlements for future employees; the “flexibility” to allow management to close corporate retail outlets staffed by unionized employees; and the elimination of a mechanism that gives the Union real influence to change letter carrier work rules.^{Footnote 62}

The current collective-bargaining round was contentious; but that was nothing new, according to CUPW. For years, and the union outlined this in some detail in its written submissions and at the hearing, collective bargaining at Canada Post had been disrupted by repeated government interventions distorting and undermining the bargaining process. Knowing that its shareholder – the Government of Canada – was likely to intervene and impose back-to-work legislation and interest arbitration, Canada Post had, and this was demonstrable, CUPW asserted, little incentive to engage in serious collective bargaining. On those handful of occasions when the government indicated it would not legislatively intervene, and free collective bargaining was allowed to run its course, the parties were able to reach a negotiated settlement. CUPW was not responsible for the failure of the bargaining process: It was pursuing its legitimate demands – demands that had been democratically determined following consultation with its membership – and then exercising its constitutionally protected right to strike. Canada Post and the Government of Canada, in CUPW’s view, bore the entire burden of responsibility for the labour dispute.

D.1.2 Canada Post’s Financial Situation

In CUPW’s view, Canada Post’s financial claims – a $748 million loss in 2023, and more than $3 billion lost between 2018 and 2023 – should “not be taken at face value and must be carefully scrutinized.”^{Footnote 63} Canada Post had, in CUPW’s view, an established practice of making self-serving and inaccurate financial projections to the point, in some cases, of actual misrepresentation. CUPW, however, was not claiming that the 2023 reported financial loss was “false”; rather, it required scrutiny, ideally with the assistance of independent financial-auditing experts who had full access to the books.

A review of recent collective-bargaining history established, in CUPW’s submission, that Canada Post’s financial claims were invariably tactical – advanced to justify service cutbacks and to achieve its concessionary collective-bargaining demands. Invariably, Canada Post’s financial projections proved inaccurate, with profits regularly being turned into losses, compensation for pay equity violations hidden and/or improperly booked, and contingent liabilities used to establish a loss. To the extent Canada Post faced financial challenges – the seriousness of which CUPW disputed – it was the result of various bad business decisions; for example, huge capital expense projects never brought on line; an explosion of non-capital investments (administrative and other category expenses); and a repeated failure to appropriately increase first-class postage rates in line with other postal services. That last decision was completely inexplicable since Canada had one of the largest geographies to deliver to in the world; and when rates were finally increased in January 2025, the value was not even accurately accounted for. CUPW and its members were not responsible for Canada Post’s bad business decisions and should not be required to pay the price associated with them.

The entire situation, in CUPW’s view, required a truly independent third-party review, also made necessary by Canada Post’s complete lack of transparency about its financial situation. This was reflected in Canada Post’s consistent failure to respond in collective bargaining, and during the Commission-facilitated mediation process, to objectively appropriate CUPW financial disclosure questions; instead, it responded with non-answers, incomprehensible answers, or no answers (for example, about the cost of pay equity settlements, but also otherwise). The Government of Canada provision of a financial lifeline – announced days before the Commission held its first public hearings – had to be viewed with a grain of salt. The timing was opportunistic, and the failure of Canada Post and the Government of Canada to provide CUPW with full transparency about the discussions that led to the decision made the entire exercise suspect, to say the least, in CUPW’s view.

D.1.3 CUPW’s Roadmap

CUPW agreed: Letter mail volumes were declining while parcel mail was surging, fuelled by the steady growth of e-commerce. The delivery market was highly competitive and the core business was changing:

If these trends persist, Canada Post may struggle to stay competitive using the traditional mail-plus-parcel, five day-per-week delivery business model. Although innovation and diversification have helped some postal operators, the core of the postal business remains rooted in mail and parcels. For Canada Post, managing this core effectively while adapting to changing market demands (weekend, evening, and same-day delivery) can unlock substantial value.^{Footnote 64}

Achievement of this objective, in CUPW’s submission, however, had to be placed in context, and part of that context required delineating the differences between private sector firms – driven by profit and focusing on the lucrative urban and suburban markets – and Canada Post’s larger national mission set out in the Act and the Postal Charter of providing delivery to Canadians everywhere on largely similar terms: the USO. The way forward was not by aping existing and new delivery competitors and their substandard wages and working conditions. Canada Post had a different mission: being a model employer – best in class providing good jobs that attract and retain employees – serving all Canadians equally, including those living in rural, remote, and Indigenous communities who rely heavily on its service. Accordingly, Canada Post had to forge a different two-fold path: adapting for the future – by identifying and then implementing new revenue sources for a reimagined and revitalized Canada Post – and safeguarding and improving the collective agreement.

D.1.4 Adapting for the Future

D.1.5 Other Potential Revenue-Generating Initiatives

D.1.6 Safeguarding the Collective Agreement

D.1.7 CUPW’s Vision of the Post Office of the Future

D.1.8 How CUPW Proposed to Get from Here to There

In CUPW’s view, the current collective agreement provided the parties with the tools needed to adapt to current challenges and grow the business. CUPW also made a detailed proposal to integrate weekend delivery into the regular schedule using full-time letter carriers, a proposal which would felicitously combine the dual objective of creating more full-time jobs and realizing significant cost savings.

D.1.9 No Structural Barriers to Efficiency in the Collective Agreements

D.2.1 The Canada Post Business

D.2.2 Status Quo Collective Agreement Provisions No Longer Viable

Status quo collective agreement provisions were no longer viable, and they had not been for years. Collective agreement provisions designed for a time when letter mail delivery was the primary business hampered, Canada Post argued, its ability to deliver outside of Monday–Friday. Without a viable 7-day-a-week delivery model for both Urban and RSMC, and without the ability to effectively deploy part-time employees during the week, Canada Post submitted that it could not recover any part of the parcel market that it had lost and would be challenged to retain the diminished share it had retained.

There were specific collective agreement work rules that prevented Canada Post from running an efficient operation.

D.4.1 The Immediate Vision

In the immediate term, Canada Post sought necessary regulatory and collective agreement changes that reflected the reality of the irreversible and continuing decline of letter mail, that allowed it to:

1. Offer a delivery model that reduced labour costs, meaning paying employees fairly for the time they worked and minimizing unproductive (trap) time; and
2. Offer affordable weekend and next-day deliveries or, in other words, parcels delivered every day of the week.

D.4.2 Five-Year/Ten-Year Visions

With 7-day-a-week parcel delivery entrenched, Canada Post envisaged a future where it could operate under realistic service standards that reflected the reality of letter mail erosion but provided Canadians, no matter where they lived, with access to both letter mail and parcel delivery, and with flexibility in how and when the service was provided while ensuring that the needs of rural, remote, and Indigenous communities were met. Canada Post saw a future where it could

• offer letter mail pricing that was tied to the cost of delivery (and reset to an adjusted service standard);
• maintain a highly accessible retail network, both corporate and partnered;
• adjust the workforce to meet operational needs and respond to competitive pressures;
• offer desirable, fair, and safe jobs but with market labour rates and market terms and conditions of employment;
• reinvest earnings in building a better Canada Post; and
• minimize the impact on the environment.

D.5.1 Urban: Part-Time Flex

Canada Post proposed a new Part-Time Flex (PTF) function within the PO LC-1 PT classification, as follows:

• The PTF function will be staffed with regular employees at a maximum of 15 per cent of full-time employees in the Letter Carrier classification in a postal unit or installation.
• PTF employees will have a guaranteed weekly schedule of 20 hours per week (Monday to Friday), but must be available to work up to 30 hours per week, when required, and may accept up to 40 hours per week on a voluntary basis.
• PTF employees will enjoy the same benefits as regular employees, subject to eligibility requirements, including job security, pension, and generous leave provisions, fostering talent retention and stability.^{Footnote 120}

In Canada Post’s submission, this proposal would provide meaningful and well-compensated part-time employment. These were not gigified jobs; far from it. This workforce would allow Canada Post to optimize its operations, meet 7-day-a-week parcel delivery demands, and reduce trapped time and overtime.

D.5.2 RSMC: Permanent Flex Employee

Canada Post proposed to replace the existing position of Permanent Relief Employee with a new Permanent Flex Employee (PFE). PFE assignments could be created for parcel-only and other work, including on weekends, and to replace employees on vacation and other leaves. These positions would maintain a minimum schedule of 20 hours per week (up to 40 hours) with no daily schedule exceeding 9 hours. Again, in Canada Post’s submission, these would not be gigified jobs.

D.5.3 Affordable Weekend Parcel Delivery

D.5.4 Load Levelling of Work

Under the Urban collective agreement – as outlined above (D.1.9.2) – despite fluctuation in letter mail, parcels, and direct-marketing materials, Canada Post had no practical ability to assign a letter carrier additional work to maximize the productive use of paid hours. This limitation led to a stark, and in Canada Post’s submission, unacceptable, result: “[S]ome employees finish work early and go home with a full day’s pay while others work overtime at premium rates.”^{Footnote 121} In these circumstances, Canada Post identified and proposed a solution to address route ownership rules and the restrictions on its ability to reassign work within scheduled and paid hours. That solution was load levelling.

In brief, under Canada Post’s proposal, amendments would be made to the Urban collective agreement to allow it to reallocate collection and delivery activities to optimize the use of scheduled hours and to assign collection and delivery activities to employees with unused hours. By and large, most letter carriers would maintain predictable work schedules and areas of delivery, but Canada Post would have the flexibility, in both low- and high-volume situations, and in unforeseen circumstances, to manage workloads that maximized the use of scheduled (and paid) hours, and avoid overtime. Another salutary element of the proposal, in Canada Post’s submission, was that with an ability to level work, health and safety risks associated with overburdening on high-volume days would be lessened. Canada Post did not agree with CUPW that as a practical matter, it could not assign productive work, for example, to a letter carrier who finished their route in less than 8 hours.

D.5.5 Dynamic Routing

Dynamic routing refers to a process of calibration of work hours and volume. Canada Post stated that it had all the information it required to institute dynamic routing: It knows the daily volume going to every depot. It knows the discrete delivery addresses. It knows the workload associated with the delivery to each address. It can combine this information to determine workload daily in real time, and then appropriately adjust routes and the delivery path. In 2017, the parties agreed to a Dynamic Routing pilot project with the objective oftesting “flexible dynamic routing delivery models (motorized and foot walks) that maximize a predictable workday for employees, enable predictable delivery for customers and enhance the overall employee and customer experience.”^{Footnote 122}

The pilot project failed in Canada Post’s view; not because it was a bad idea, and not for the reasons suggested by CUPW, but because the parties could not agree on many of its core components (as Canada Post outlined in its written submissions and at the hearings).

The need for dynamic routing continued, in Canada Post’s submission. To succeed, Canada Post required the ability to align workloads daily, prevent overburdening of employees, and respond to customer needs in real time. Introducing dynamic routing was a long-term project, unlikely to be achieved through the term of the next collective agreement. But Canada Post could not, and would not, allocate the necessary resources to introduce dynamic routing without making the necessary collateral changes to the Urban collective agreement. In the meantime, it needed the ability to test drive its dynamic routing model in up to 10 locations, and it set out its proposal to do so in its brief.

D.5.6 RSMC Hourly Rate and Workload Measurement System

There was already agreement in place to transition RSMC employees to hourly paid, conditional on development of an updated workload measurement system. Routes had to be restructured with appropriate time values that accurately reflected the work performed – routes, in other words, that were suited to hourly remuneration (not the current activity-based compensation model). Many of the key elements of this new measurement system have been agreed upon. Canada Post proposed that the outstanding items be subject to a joint validation process, and if no agreement reached, arbitration.

D.6.1 Canada Post’s Rejection of CUPW Proposals to Restrict Flexibility

What was required was additional flexibility to meet current challenges, not the introduction of new collective agreement rules, whether deliberately intended or not, that would have the opposite effect. Canada Post rejected CUPW’s proposal to restrict SSD (which had been upheld at arbitration). (See D.1.6.4, above.) It rejected CUPW’s proposal to obtain RSMC job security, which provided parity equivalent to that in the Urban collective agreement. It rejected CUPW’s demand for a wholescale prohibition on contracting out. It rejected CUPW’s proposed expansion of the technological change provision of the collective agreement as this proposal would require Canada Post to consult with CUPW before implementing virtually any change (and leave it up to an arbitrator if the consultations did not result in agreement). It rejected CUPW’s demand that Canada Post provide RSMC employees (who largely provide their own vehicles and receive reimbursement) with corporate vehicles at the cost of approximately $100 million. It rejected various proposed changes to the ratio and other provisions of the Urban collective agreement.

D.6.2 Cost Savings

In addition to collective agreement flexibility to successfully and competitively introduce weekend work and parcel delivery, Canada Post identified the need to address its high labour costs. The productive hourly rate was, as set out above (see D.5.3.3), higher than any of the labour costs incurred by its unionized competitors, and much higher than what was found at the non-unionized competitors (many of which were staffed by independent contractors). Likewise, existing Cost of Living Allowance (COLA) payments shifted the risks associated with high inflation to Canada Post.

Between 2001 and 2020, the COLA clause was not activated. In 2021, 2022, and 2023, it was at a cost of approximately $78 million (when Canada Post posted a loss of $748 million). Other costs incurred by Canada Post – unknown among its unionized and non-unionized competitors – included pre-retirement leave, marriage leave, leave for other reasons (after personal leave was exhausted), examination leave, career development leave, personnel selection leave, and night workers’ leave. Vacation leave at Canada Post was demonstrably superior to its unionized competitors. None of the competitors enjoyed five minutes of paid wash-up time or paid lunches. Post-retirement benefit costs were projected to increase. All other employee groups had moved to a 50-50 cost-sharing ratio (and management employees paid 100% of the premiums). CUPW members paid 35%. This was not, Canada Post suggested, defensible or sustainable on a comparability basis. The pension plan was currently stable – a pension contribution holiday was in effect – but Canada Post was responsible for funding any deficits in this sole-sponsor plan. Except for CUPW members, Canada Post had moved all its other employees, including those in other unions, to a defined contribution plan. 

D.7.1 Wages

Year 1 (2024): 5%
Year 2 (2025): 2.5%
Year 3 (2026): 2.0%
Year 4 (2027): 2.0%

D.7.2 Pension and Benefit Eligibility

Currently, employees are eligible to receive benefits and participate in the pension plan as of the date they become regular employees. Putting aside that defined benefit pension plans were now anomalous, especially for new hires, Canada Post proposed that newly hired employees become eligible for pension and benefits only after six months of consecutive service as a regular employee.

D.7.3 Post-Retirement Benefits

Canada Post proposed amending the split to 60-40 for future retirees only, beginning January 1, 2026.

D.7.4 Wash-Up Time

Canada Post proposed elimination, which would not impact take-home pay but would reduce unproductive time.

D.9.1 Comprehensive Review of the Regulatory Framework

The Postal Charter, described above (see 2.6), sets out the Government of Canada’s service expectations for Canada Post. The Postal Charter had not changed since 2009 (when the current service standards were put into place). The Postal Charter is subject to review every five years but has not been reviewed since 2018 (before the precipitous decline in letter mail and the explosion in parcel mail delivery and the expansion of both unionized and low-cost competitors). A review, and a refresh to meet current conditions, was, accordingly, overdue, and that meant providing baseline services while ensuring cost effectiveness.

D.10.1 Closure of Rural Post Offices

Cancellation of the moratorium on the closure of rural post offices was also necessary. A blanket moratorium that was oblivious to current demographic and census data was inappropriate, in Canada Post’s view. Moreover, there were more effective ways to conveniently serve Canadians other than traditional post offices (for example, by providing access to Canadians where they worked, lived, and shopped). Canada Post acknowledged the importance of its post office network to Canadians across the country, especially those living in rural and remote regions, but the moratorium significantly contributed to its current financial unsustainability. Approximately 30% of post offices in areas deemed rural in 1994 were now classified as urban, according to Statistics Canada data. The moratorium precluded the conversion of post offices to franchise outlets (which were managed by retail partners, often pharmacies, with better hours and convenient locations).

D.10.2 Moratorium on Community Mailbox Conversion

Likewise, and as part of any regulatory framework review, Canada Post sought an end to the moratorium on community mailbox conversions. As noted, more than 70% of Canadians had their mail and parcels delivered to a centralized location. Community mailbox conversions has been identified as Canada Post’s greatest savings opportunity.^{Footnote 123} For the past 40 years, homes built in new developments have received delivery to community mailboxes; there have been no new addresses added to door-to-door delivery. Meanwhile, some 40% of delivery costs went to serving 25% of Canadian addresses. Delivery to the door costs 75% more than delivery to a community mailbox ($284 per address vs. $162). For those communities served by community mailboxes, Canada Post had in place a personalized accommodation program for people with disabilities and seniors. Community mailboxes also enhanced letter carrier health and safety; there were fewer injuries resulting from slips, trips, falls, sprains, and animal bites.