With the holiday shopping season starting, analysts are concerned that businesses, both big and small, will take a financial hit amid contract talks between Canada Post and the Canadian Union of Postal Workers (CUPW).
The two sides have gone back and forth over a new deal for nearly two years. A federal mediator has been appointed, but there hasn’t been much movement. Postal workers are still taking job action, including rotating strikes, and customers are being warned to expect delays.
“There’s so much uncertainty there,” retail analyst Bruce Winder tells 1130 NewsRadio.
“Uncertainty is the kryptonite of business.”
He explains that businesses are leaning on other couriers to deliver and ship items, but that can be costly, and customers may not be immune to paying for it.
“A lot of those small businesses have had to use alternate means; they’ve had to go to private courier companies, which are more expensive. A lot of small companies don’t have the margin to eat [the extra cost]. They may try to eat some of it, but they realistically don’t. So, they’re going to have to pass on a lot of that to the consumer. The big companies, like Canadian Tire, will just eat it and chalk it up to a tough distribution year, but it is bad for our economy.”
In addition to potentially having to pay more for shipping costs, he says some consumers may sidestep buying holiday gifts at all because they’ll be worried their parcels won’t arrive in time.
As part of its workers’ job action, Canada Post isn’t delivering flyers in Quebec (excluding the Metro-Montreal Region), and Winder points out some companies may be relying on digital channels to get the word out, but that doesn’t work for every demographic.
“Older consumers are being left out, or at least consumers who aren’t as tech-friendly, who don’t have all the latest apps on their phone, who don’t use digital to shop. They’re in the dark right now. They don’t know what’s on sale.”
“We do still need mail. Certainly, things have moved over toward digital, but we’re not 100 per cent there.”
Financially, Winder says the change will cost businesses a lot of money come Black Friday, Cyber Monday and shortly, Boxing Day.
“This is the worst possible timing. In aggregate, if you added everything up between big and small companies, it’ll probably be in the tens of millions of dollars. Small companies are going to lose sales because they’re going to have to pass on some of those extra charges for a courier and some customers will opt out.”
The silver lining, he says, is that other delivery companies are picking up more clients.
Winder says the situation underscores how much Canadians still need a reliable postal service.
“We do still need mail. Certainly, things have moved over toward digital, but we’re not 100 per cent there. We’re in a transition period and probably will be for the next decade or two. I think it’s a message to government and companies: ‘Don’t shut this off. You can do it more efficient, but let’s get back to business and get things rolling.’”
Winder says if you don’t want to get caught having a late Christmas present delivered, consider sending an e-gift card instead.
Earlier this month, Canada Post submitted a plan to the federal government, outlining how to transform its struggling business model into one that’s financially sustainable.
Those changes included adjusting mail delivery standards, expanding community mailboxes to more Canadians and ending the moratorium on closing rural post offices. But full details of the plan won’t be revealed until the federal government signs off on it.
The two sides have been back at the bargaining table since the end of October, but at this point, there is no indication that a new deal is on the horizon.
The Crown corporation’s most recent offer to the union early last month included provisions for job losses, and waived a signing bonus that was included in the previous proposal in May. It included the same offer to hike wages by 13.59 per cent over four years. The union asked for a 19 per cent raise in August.
Editor’s note: A previous version of this article wrongly said that Canada Post isn’t delivering flyers across the country. In fact, the flyer ban is only in effect in Quebec (excluding the Metro-Montreal Region).
