Companies & Industries

Canada Post doubts have spelled opportunity for its competitors

Canada Post has lost 75% of its parcel delivery business as labour disputes drag on. Here's where some of those customers are going

Canada Post sign with CUPW protester

Canadian Union of Postal Workers protest outside the main postal station of Halifax during a 2011 strike. (Andrew Vaughan/CP)

In 2011, three months after Chit Chats Express opened its first warehouse in Markham, Ontario, disputes between Canada Post and its unionized workers culminated in a strike. Canadians were left clambering for an alternative to their national postal service, and Chit Chats, a family-run courier service, was there to take them in. “We definitely generated a lot of new business because of the strike,” says the president of the company, Carly Wood. “Our business probably doubled that year.” The company had been operating out of her home for the ten years prior.

Five years on, and many Canada Post refugees have become loyal Chit Chats customers, helping grow the business, which now has six facilities—four in Ontario, and one each in B.C. and Nova Scotia.

Now, Canada Post and the Canadian Union of Postal Worker are embroiled, yet again, in a labour dispute, which could halt postal services if an agreement can’t be reached. And while many businesses and individuals across Canada are worrying about how a work stoppage might affect them, companies like Chit Chats are revelling in the extra business. “The influx of calls and inquiries and new business has been overwhelming,” says Wood.

While Chit Chats specializes in delivering from Canada to the States where the United States Postal Service completes the delivery, it handles shipments within Canada and internationally as well. Chit Chats is able to offer rates close to 70% lower than Canada Post’s because of its partnership with USPS, and because of its ability to negotiate deals with Canada-based couriers. Domestically, Chit Chats uses Canada Post for deliveries, and with the threat of a lockout, the company has started using a variety of different couriers, like UPS and Canpar—companies which, not surprisingly, are experiencing a surge in business, too.

“We’re calling it Christmas in July here,” says Steven Vitale, a spokesperson for UPS. Vitale says UPS started working with large companies a few months ago, at the first sign that a strike or lockout could disrupt their business. And more recently, over the last few weeks, more “casual” users and small businesses have also made the switch to UPS. “We’re already starting to see more volume being dropped off at our access points,” says Vitale, referring to the 900 UPS drop-off and pick-up locations dispersed across Canada. While he couldn’t say for sure how many Canada Post customers have switched to UPS, Vitale estimates that volumes have increased to peak-season levels, during which period he says the company sees “double digit growth.”

FedEx wouldn’t comment directly on how the threat of a mail disruption has affected its business, but the company has issued a statement saying it has a contingency plan in place, noting, “We may adjust some of our domestic services to accommodate increased volume.”

For Flagship Courier Solutions, which works like a courier broker for Purolator, UPS, and FedEx, business is even better now than during their high season. According to David Kruger, director of sales for Flagship, the company has brought in about 300 new customers in the last couple weeks. “We’ve been short staffed and running around like chickens with our heads cut off to get everything done,” says Kruger. Like Chit Chats Express, Flagship saw business boom during the last Canada Post work stoppage, but says “2011 wasn’t as crazy as this one is. Certainly, the leadup wasn’t like this.” Kruger credits the larger volume to more online shopping. “The e-commerce industry has just gone out of control in the last five years,” he says.

In fact, parcel shipments is the only area where Canada Post has seen business grow rather than shrink. Since 2011, the crown corporation’s package deliveries increased from 94 million to 133 million units—progress that’s been reversed in the last few weeks. Not only is letter mail down 50% because of the threat of a disruption, but Canada Post has lost 75% of its parcel business. “Nearly all of our largest e-commerce customers have already moved most or all of their parcel volumes to other carriers,” it conceded in a news release.

But what’s bad for Canada Post is good for its competitors. “As soon as the labour disputes started, the inquiries started coming in,” says Wood, “and it hasn’t stopped.” Whether or not a strike or lockout happens, Wood predicts that many Canada Post customers that have switched to Chit Chats will stick with her company. “A lot of the inquiries that we get, the original call is to find if there’s an alternative out there. What they end up finding is that not only is there an amazing alternative, but one that could potentially change their business dramatically,” says Wood. “They end up moving over to us regardless, and will likely stay with us beyond the lockout.”