Rush to find delivery alternatives
E-commerce businesses worried about extra shipping costs during potential Canada Post stoppage
Many Canadian businesses that rely on mail orders have been scrambling for weeks to prepare for a potential delivery shutdown at Canada Post.
The Crown corporation said Tuesday it had issued a 72-hour lockout notice to the Canadian Union of Postal Workers (CUPW), raising the spectre of a work stoppage by Friday.
The parcel delivery business has been a major contributor to Canada Post’s revenues in the past few years, with volumes growing by 10 per cent in 2015 year-over-year.
Many of those deliveries are from e-commerce businesses that have been forced to make alternative plans to deliver their goods to customers. They’re also worried about the long-term costs of doing so if a work stoppage drags on.
“I think I’ve definitely seen a few more grey hairs this week than normal,” said Suneal Pabari, co-founder of coffee subscription service the Roaster’s Pack, which is “incredibly dependent” on Canada Post.
The company has been trying for weeks to work out a plan with alternative shippers that won’t kill its profitability.
Pabari said the rates they’ve been quoted range from 50 to 100 per cent more than what they were paying with Canada Post.
The company decided to use FedEx in the interim, but is worried about the cost of the switch and what it will mean for the bottom line.
“It’s really challenging for a small business like ours to eat those costs.”
Erin Maynes, CEO of food box delivery service FoodiePages.ca, is similarly worried about the decision to switch to more expensive couriers — especially for those orders going to more remote areas. Canada Post offers the best rates to P.O. boxes, rural and remote areas, she said.
“The unfortunate thing is we have a better rate with Canada Post because we don’t have an agreement in place with these other couriers,” she said.
“We’re kind of eating some of those shipping costs because we don’t want to pass those on to our customers.”
Canopy Growth Corp., the company that owns licensed medical marijuana producers Tweed and Bedrocan, has implemented a contingency plan so that patients can continue to get their prescriptions filled.
Health Canada’s rules state that medical marijuana can only be delivered through the mail, so many companies are dependent on Canada Post.
The postal delivery service gave Canopy Growth advance notice of a possible service interruption about a month ago, said spokesman Jordan Sinclair.
“We just couldn’t take the risk of people’s packages being stuck in the mail if there was a delay.”
The company switched to alternatives more than a week ago, he said.
“But there are some differences and obviously when you’re talking about peoples’ medications, that is less than ideal.”
Meanwhile, competitor delivery services are planning for a boom in business.
UPS said Tuesday it has already seen an increase in business and that it is ready to take on even more.
At Good Foot Delivery, a Greater Toronto Area public transit-based service that employs people that identify with disabilities, a potential work stoppage is a mixed blessing, said operations co-ordinator Courtney Ayukawa.
While it could mean an increase in delivery time because the couriers rely on Canada Post for delivery legs outside the GTA, she is also expecting an increase in business. “I think we could start to get new customers if Canada Post does go out of service,” she said.
“I’ve told a few of our staff that they might need to work an extra shift or two,” she said.
Some believe the work stoppage could have long-term impacts on one of Canada Post’s few bright spots, parcel delivery.
“It negatively affects Canada Post in the way that now their competitors have a lot more data about where volume is going,” said Rebecca McKillican, CEO of Well.ca, an online-first retailer that specializes in health, baby and beauty products.
The company has been preparing for months for a potential work stoppage and switched all of its deliveries to its second carrier, UPS, as of June 23 to ensure none of its customers were affected.
“I would anticipate UPS or any other carriers becoming more aggressive when they see the type of volume that’s out there.”