Canada Post strike: What’s at stake for the Canadian economy? – National | Globalnews.ca

The Canada Post strike is set to have the sharpest impact on small businesses and customers of the postal service, particularly those living in remote and rural communities, according to experts who spoke to Global News.

A lengthy labour disruption could have disastrous implications for the future of the national postal service itself, some warn.

Saturday marks the second day in a nationwide strike of Canada Post workers represented by the Canadian Union of Postal Workers (CUPW), with no indication yet that the two parties are getting closer to a deal.

No new parcels or letters are being accepted by the carrier and mail already in the Canada Post system is stuck in limbo as the gears of the national postage system grind to a halt.

Retail analyst Bruce Winder tells Global News that Canadians are going to notice the impacts of the strike “right away.”

“This is going to be clunky, this is going to be a little messy for a while,” he says.

2:51
How the Canada Post strike could impact supply chains

Customers ordering from Canadian small businesses will notice the disruption as merchants are forced to pivot away from Canada Post for parcel delivery, Winder says.

Instead, he says businesses will have to rely on couriers and other private options, “which are more expensive, so it’s going to hit their bottom line.”

“Small businesses who use Canada Post to deliver packages to customers, that’s going to be a massive hit to them,” Winder says.

The impact of the Canada Post strike is compounded by the lingering effects of shutdowns at ports in British Columbia and Quebec.

Labour Minister Steve MacKinnon stepped in this week to order binding arbitration on the parties involved to get maritime trade flowing again through Canadian ports. Workers in B.C. went back to work on Thursday, while peers at the Port of Montreal resumed work Saturday.

But Winder says the Canadian supply chain can’t bounce back so quickly from a series of concurrent disruptions like this.

Get weekly money news

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.

With manufacturers relying on “just in time” deliveries to keep their assembly lines flowing, Winder says shutdowns at the ports followed by a Canada Post strike create a “ripple effect” that throws the rest of the supply chain off balance.

“If you miss a few days of shipping, it could take days or weeks to catch up. This has been a really perfect storm unfortunately for the Canadian supply chain industry, affecting manufacturers, retailers, consumers, you name it,” he says.

While competitors such as FedEx and UPS can accommodate some of the increased traffic from a shuttered Canada Post, Winder says there’s only so much capacity these private options can take on.

“There’s a little bit of wiggle room there, but not too much. Otherwise they’d have too many overhead costs,” he says.

Winder says the federal government has to consider declaring the postal service an essential service to prevent these kinds of disruptions from piling up and weighing on the economy.

“I know labour groups won’t like that. But it’s just so important to make sure business runs smooth. The whole economy depends on it,” he says.

The federal government’s intervention in the ports disruptions this week marked the second time this year Ottawa has used binding arbitration to end a work stoppage that threatened the Canadian economy, last deploying such powers in the rail shutdown this past August.

MacKinnon said Friday that he is “not looking at any other solution other than negotiation.”

2:04
Canada Post strike: Ottawa not looking at forced end, labour minister says

“Right now, every day is a new day in collective bargaining and we are going to continue to support the parties in any way we can and make sure they are able to try and get a negotiated agreement,” he told reporters in Montreal.

Ian Lee, a Carleton University business professor who has studied the Canada Post model throughout his career, agrees that small businesses are most likely to be impacted by the disruption.

He adds that because Canada Post is the only service in the country reaching every address coast to coast to coast, Canadians living in rural and remote communities will also bear the brunt of the strike.

But Lee adds that for the Canadian economy, a Canada Post strike in 2024 is very different from the disruptions of the 20th century. In the past, a Canada Post shutdown would make a tangible impact on the Canadian gross domestic product, because of how much of the national payment system relied on invoices and cheques arriving through the mail.

In the modern digital landscape, Canada Post does not have such an outsized role in the Canadian economy, he argues.

“That reality no longer exists for Canada Post because they don’t shut down the economy and the payment system,” Lee says.

“I’m not trivializing a postal strike to those people who are affected. It’s going to be very real for them. I’m just saying it’s not going to be national and catastrophic.”

Both Winder and Lee argue that as the strike stretches on and businesses pivot to private options to fill the gap, Canada Post risks worsening its already dire financial circumstances.

“Whenever someone goes on strike like that, whenever a system shuts down, if people get used to using a different service provider and maybe they find that provider is better in some ways, there’s a risk they won’t go back to the original service provider,” Winder says.

Lee says private competitors are more “resilient” and “dynamic” than Canada Post. If they see an opportunity to exploit a lengthy shutdown from the national postage service, they will “move heaven and earth” to do so, he says.

That puts the future of both Canada Post and the workers the union is representing at risk, Lee argues.

“Canada Post and CUPW are shooting themselves in the foot,” he says.

— with files from Global News’ Anne Gaviola

2:02
Canada Post strike concerns small businesses in Halifax

&copy 2024 Global News, a division of Corus Entertainment Inc.