Canada Post is preparing to expand its parcel delivery offering with weekend service in Ottawa, Montreal and Toronto later this year, as the state-owned postal operator moves ahead with a broader effort to modernize its business and regain profitability.
The planned weekend deliveries are part of a strategy aimed at strengthening Canada Post’s position in the increasingly competitive e-commerce parcel market. The company announced the initiative on Friday alongside second-quarter results showing early signs of recovery after a prolonged labor dispute.
Canada Post said the resolution of the labor conflict helped restore customer confidence during the second quarter. The improvement contributed to a recovery in parcel activity and helped the postal operator reduce its pre-tax loss by one-third to US$199.7 million.
The company also reported a 6.3% reduction in costs during the quarter, supported by improvements in operational productivity.
Labor stability supports recovery
The Canadian Union of Postal Workers, which represents Canada Post’s mail carriers, ratified a new contract in early June following more than two years of difficult negotiations. The period included two general strikes, rotating regional strikes and work slowdowns, creating significant uncertainty for households and businesses.
The prolonged labor instability also pushed many e-commerce shippers toward private-sector delivery companies, contributing to the decline in Canada Post’s parcel volumes and revenue.
The new retroactive five-year agreement runs through January 31, 2029, providing the company with greater stability as it restructures its operations.
Despite the improvement during the quarter, Canada Post recorded a loss of $347.5 million for the first half of the year, compared with $323 million during the same period last year.
Parcel revenue rises as letter mail continues to decline
Quarterly revenue increased 1.5% year over year to $1.1 billion, with parcel operations providing the strongest contribution to growth.
Parcel revenue jumped 20.7%, while parcel volumes increased 15.6%. The trend contrasts sharply with traditional letter mail, whose volume fell 9.2% from a year earlier. The previous year had benefited from election-related mailings from candidates, helping explain part of the decline.
The decrease in letter mail volumes contributed to a 9.1% drop in mail revenue. The business has been under sustained pressure for years as Canadians increasingly rely on digital communication.
Direct marketing mail also weakened slightly, with volumes down 0.2% and revenue declining accordingly.
Operational transformation accelerates
Greater labor stability is allowing Canada Post to move forward with additional parcel services while implementing a series of operational efficiency measures.
Among the initiatives are more flexible staffing arrangements, adjustments to workloads based on workforce deployment, vehicle sharing and efforts to streamline letter mail operations.
The company is also working with communities across Canada to convert 621,000 addresses from door-to-door delivery to secure community mailboxes by early 2027. Over the longer term, approximately four million addresses are expected to be converted to community mailbox delivery.
Centralizing residential delivery is one element of a much broader transformation program. The plan also includes closing post offices and reducing delivery standards in an effort to improve the company’s financial position and service performance.
Since 2018, Canada Post has accumulated $4.76 billion in losses and has consequently become reliant on government assistance.
E-commerce remains a key growth opportunity
Management is increasingly looking to e-commerce as a source of future growth and plans to reinforce Canada Post’s role in the parcel delivery market.
The strategy includes expanding home parcel pickup services to 8.6 million households, introducing box-free and label-free returns with selected online retailers, improving local next-day delivery capabilities and providing strategic pricing discounts to businesses.
The company is also preparing for the launch of weekend parcel delivery across the Ottawa, Montreal and Toronto metropolitan areas later this year.
Canada Post is pursuing opportunities beyond traditional postal services as well. During the second quarter, it launched a proof of concept for Canada Shops, an online marketplace designed to connect Canadian small businesses with customers nationwide through Canada Post’s delivery network.
The combination of expanded parcel services, operational restructuring and new e-commerce initiatives reflects the postal operator’s broader attempt to adapt its business model to changing consumer habits while rebuilding its financial position.
