Small shipping companies taking advantage of Canadian Post strike to grow popularity

Small e-commerce shipping companies that grew in popularity during the pandemic are experiencing a surge in demand for their services during the Canada Post strike, as businesses seek out alternative delivery options.

 

Canada Post workers have been on strike for almost one month as the Crown corporation and the union representing these workers remain at odds over the terms of a new collective agreement. On Tuesday, the Canadian Union of Postal Workers submitted proposals to Canada Post that it said would bring both parties closer to reaching a deal. The main sticking points are wages and the use of part-time employees to conduct weekend parcel delivery.

 

Canada Post is heavily utilized by retailers, especially within Canada, because its rates are substantially lower than those of larger couriers, such as UPS and FedEx. But the strike is pushing many small businesses to find other delivery companies to fulfill their orders during the busy holiday season.

 

Sendle, an Australian delivery company that expanded to Canada in 2021, is dealing with a rush of queries from retailers who had delivery contracts with Canada Post. “The surge in demand has been enormous – we have delivered more parcels in December to date than all of November,” said James Chin Moody, the San Francisco-based chief executive officer of Sendle.

 

Sendle has more than 500 drop-off locations across Canada and utilizes packaging centres and convenience stores as drop-off points. Mr. Moody said his company has the capacity to handle increased parcel numbers and can service almost all of Canada, including remote and rural regions.

“We are competitors to Canada Post geared at small businesses. Our model works because we are focused on helping smaller merchants reduce their delivery costs,” he said, adding that Sendle prices deliveries within Canada and to the U.S. at rates slightly cheaper than Canada Post.

 

One of the key differences between Sendle and Canada Post, beyond the Crown corporation’s sheer scale, is the way in which deliveries are conducted. Sendle does not hire its own delivery drivers – it outsources deliveries to trucking and logistics companies such as TFI International Inc.

 

Mr. Moody says utilizing third-party companies for deliveries is the most efficient way for him to run his business, and keeps his labour costs low. Canada Post’s labour model is built on thousands of full-time, part-time and temporary employees conducting both parcel and mail deliveries. Labour costs, according to Canada Post’s 2023 annual report, consume about 70 per cent of the company’s yearly revenue.

 

Chit Chats, a Burlington, Ont.-based delivery company, has seen an 800-per-cent increase in new signups for its services and a steep increase in package volumes since the strike began on Nov. 15, according to company spokesperson Juhee Cha.

 

Chit Chats is a middleman in the delivery chain: It picks up packages from retailers and utilizes couriers such as Canada Post and Montreal-based delivery company Intelcom for the last leg of delivery. Since the strike, however, it has also had to pivot to replace Canada Post for the last mile, in addition to handling an increase in demand for its services.

 

“We’ve even gotten requests for letter mail from individuals who have looked us up online. They’re asking us if we can deliver cheques. Many are saying they will continue using our services even after the strike ends as the pricing is more competitive and the transit times are much faster,” Ms. Cha said.

 

Chit Chats has about 200 workers, including full-time drivers. The drivers are mainly used for cross-border trips; Chit Chats drives packages across the American border and uses United States Postal Service for delivery within the U.S. Its main partner for deliveries in Canada right now is Intelcom. Ms. Cha says it is cheaper for the company to outsource the last leg of delivery, which enables it to price competitively.

 

Canada Post has long alluded to the rise of third-party couriers and their low-cost labour model as a reason the postal service is struggling to gain a larger chunk of the market share in parcel delivery.

 

Senpex, a California-based courier company that is also increasing in popularity among Canadian retailers, uses independent contractors who own their own vehicles and work flexible hours, as opposed to hiring full-time delivery drivers. Shippie, a Mississauga-based startup, also uses the independent-contractor model for deliveries (they call their drivers “delivery partners”).

 

Canada Post said that since 2021, its market share in parcel delivery has eroded by more than half – from 62 per cent then, to 29 per cent in 2023.

 

A key point of contention in the Canada Post strike is that the Crown corporation wants to create a new class of part-time workers who will work just eight hours a week to facilitate weekend delivery.

“This is a unique labour dispute because there is an entrenched impasse between both sides over the sectoral conditions that make the viability of the post office’s current model of employment difficult to envision in the long-term,” said Stephanie Ross, associate professor of labour studies at McMaster University.

 

Both sides have since reached an agreement on the issue for one group of workers – rural and suburban mail carriers – by agreeing to convert relief employees (those on standby for sick calls) to flex employees who will be guaranteed at least 20 scheduled hours per week.

 

But the larger issue remains for both the union and the Crown corporation: The former is trying to protect against the growing use of flexible or gig workers, and the latter believes it will lose money and relevance if it maintains a labour model that mainly relies on full-time employees.

 

Mr. Moody, the CEO of Sendle, is hopeful that greater demand for Sendle’s services will continue even after the strike is over. “Canada has some of the highest shipping costs in the world,” he said. “Retailers are always looking for cheaper and quicker shipping options and there are many companies out there right now that will give them that.”

 

 

 

 

This article was first reported by The Globe and Mail