Canada Post is facing a critical financial crisis, described in a new report as “effectively insolvent”, with urgent recommendations issued as a strike or lockout looms as soon as May 22. The report, authored by Commissioner William Kaplan, was commissioned to review the long-standing labour dispute between Canada Post and the Canadian Union of Postal Workers (CUPW), following over 30 days of disruption and government intervention.

Kaplan’s report lays out seven recommendations aimed at preserving Canada Post as a vital national institution while addressing its dire financial situation. Central among these is the recommendation to phase out daily door-to-door letter mail delivery for individual residential addresses, a longstanding promise Canada Post has made to Canadians. Instead, he suggests increasing the use of community mailboxes “wherever practicable.”

The commissioner argues that the Crown corporations charter should be amended to reflect modern realities, stating that Canada Post “cannot continue to require impossible-to-meet delivery standards.” However, he emphasizes that businesses should continue to receive daily deliveries.

Despite endorsing a shift away from home delivery, Kaplan acknowledges the value of the promise to deliver to every Canadian address, describing it as “worth preserving.” Yet, he warns that the corporation must undertake hard-headed, practical thinking to avoid bankruptcy and become sustainable without continuous government subsidies.

Kaplan also recommends lifting the current government moratorium on rural post office closures, saying that while rural offices once vital, many have become urban and no longer require protection from closure. He notes that Canada Post’s delivery accommodation program offers alternatives for those who cannot access community mailboxes.

The report also addresses labour relations, urging collective agreements to allow Canada Post more flexibility in hiring part-time workers to handle weekend parcel delivery and variable volumes throughout the week. It recommends adjusting delivery routes dynamically to reduce wasted time and costly overtime.

Canada Post CEO Doug Ettinger welcomed the report’s recommendations, describing it as a “frank and straightforward assessment” of the challenges facing the corporation. Ettinger emphasized the importance of adapting to changing delivery demands to support Canada’s economy amid external threats. The corporation plans to work closely with the union and government to implement reforms and build a modern postal service fit for current and future needs.

The Canadian Union of Postal Workers (CUPW) acknowledged receipt of the report and is currently reviewing its details. The union called on Canada Post to return to the bargaining table following a recent request from the corporation for a “temporary pause” to develop comprehensive proposals. CUPW has arranged a meeting with federal ministers to discuss the dispute further.

The Upcoming IPOs in this week and coming weeks are Blue Water Logistics, Unified Data - Tech Solutions, Victory Electric Vehicles International, Borana Weaves, Dar Credit and Capital, Belrise Industries, Wagons Learning.

The Closed IPOs are Accretion Pharmaceuticals, Integrity Infrabuild Developers.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst