With each passing year Canada Post sinks deeper into irrelevance, its 19th-century monopoly model eroding and overtaken by the miraculous forces of innovation and market competition. There was a time when management and the unions could parlay their way through ritual confrontations unphased by competitive risks.

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Terence Corcoran: Canada Post versus the union — Is this the last strike? Back to video

Consider this bit of history from a 30-year-old paper titled Monopoly and the Mandate of Canada Post. In the 26 years between 1965 to 1991, postal workers went on strike 12 times. As unions consolidated, they also gained new powers to resist Canada Post’s attempts to improve operations. Among the union gains “at the expense of Canada Post and Canadian consumers,” the most significant benefit was that “all unionized employees have job security: they cannot be laid off.”

The authors of the 1997 paper reach an obvious and prophetic conclusion: “The power of the postal worker unions to extract such a concession casts serious doubt over whether Canada Post can ever be the lowest-cost provider of competitive postal services.”

As Carleton University’s Ian Lee reports in a recent paper, Canada Post is the highest cost provider of services in an industry that has been transformed by lower-cost and innovative competitors. According to his industry sources, Lee writes that the average all-in operating costs per hour of parcel delivery at Canada Post is $50 to $60 compared with $40 to $50 at such legacy couriers as FedEx and $20 to $30 at private competitors who use gig workers.

In its core business, letter mail, Canada Post has experienced a two-decade steady decline from 5.5 billion pieces a year in 2006 to 2.3 billion in 2022. The reasons are obvious, dominated by the digital transformation of communication and financial transactions. Nobody needs to receive by mail a monthly telephone bill to be paid by mail.

As the strike unfolds, Canada Post’s financial situation is essentially a crisis. The Crown corporation’s pre-tax operating financials — never all that healthy — have plunged  into unsustainable annual losses (see graph) that hit $748 million in 2023. In his paper, Lee says Canada Post is at a point where radical action is needed. Canada Post is currently uncompetitive in parcels and is losing market share. Its letter mail mandate is increasingly irrelevant, although it delivers profits. But even that benefit is set to decline as even more nimble private competitors cherry-pick the most profitable aspects of the business.

Lee has his views on how to restructure Canada Post into a competitive and profitable operation, one that is radically reduced in scope, size and manpower. In an interview, Lee estimated that a proper restructuring of the operation could involve reducing staff levels from existing 55,000 employees to 15,000. Lee proposes franchising all post offices, an end to door-to-door delivery and partnerships with existing parcel delivery services.

But Lee’s ideas are just the beginning of an economic and corporate policy debate that now needs to take place. Writing in the Globe and Mail, Larry MacDonald outlines the role that privatization could play in resolving Canada Post’s financial crisis. How far should such privatizations go? Canada Post, with its complex “universal service” mandates and union structures, is not just another Air Canada.

The restructuring would also have to take into account the ongoing emergence of new competitors coming up through the market. An example is Trexity, an Ottawa-based  parcel and letter delivery service with operations in major Canadian cities. The founder and CEO of Trexity is Alok Ahuja, an entrepreneur now set to deploy his gig-driven business-to-business and business-to-consumer tech-driven operation to replace Canada Post in coming days as the strike continues. Looking ahead, however, Ahuja told me in an interview that his business model could not only compete with Canada Post and other delivery services, it could also become a complement — even a partner with— a revamped and reformed Canada Post.

When it comes to Canada Post, anything and everything seems possible as the current union negotiations unfold in what could be the last strike.