OTTAWA – A newly released federal report backs Canada Post’s warning of serious financial troubles and recommends sweeping changes to its operations, leaving the union representing postal workers with little leverage in ongoing contract negotiations.

The 162-page Industrial Inquiry Commission report, released Friday, comes just days before a May 22 deadline to reach a new collective agreement between the Crown corporation and the Canadian Union of Postal Workers (CUPW). Without a deal, the threat of renewed labour disruptions looms.

Commissioner William Kaplan’s report paints a stark picture of Canada Post’s finances, describing the corporation as “effectively insolvent” and in need of immediate structural reform. His recommendations include phasing out daily door-to-door letter mail delivery to individual households while maintaining business deliveries and lifting moratoriums on rural post office closures and community mailbox conversions.

“My recommendations are based on my conclusion that there is a way to preserve Canada Post as a vital national institution,” Kaplan wrote. “They are designed to respond to the present problem: to arrest and then reverse the growing financial losses by putting into place the necessary structural changes.”

Kaplan’s report was commissioned after the federal government intervened in last year’s holiday-season strike, ordering postal workers back to work. The report analyses the current state of Canada Post’s operations and the ongoing labour dispute.

In his report, Kaplan concluded that negotiations have stalled largely because CUPW is “defending business as usual” and seeking enhancements to a business model that no longer works.

He argues the traditional system, where urban and suburban mail deliveries subsidized the costlier delivery to rural, remote, and Indigenous communities, has collapsed because of digital disruption. “Fewer letters must now be delivered to more addresses,” he wrote.

The report recommends allowing Canada Post more flexibility in staffing and operations, including hiring part-time employees to handle parcel deliveries on weekends and during peak periods, and adjusting delivery routes daily to reflect demand.

While CUPW has opposed such proposals, citing concerns over job security for full-time workers, Kaplan emphasized that any part-time roles “should not be gigified jobs, but good jobs, attractive jobs” within the scope of collective agreements.

That suggestion may provide little comfort to union members who fear losing full-time status.

Canada Post CEO Doug Ettinger welcomed the report, calling it a “frank and straightforward assessment” of the corporation’s challenges. He said the recommendations come at a “critical time” as Canada works to strengthen its economy and safeguard it against external pressures.

CUPW acknowledged receiving the report and was scheduled to meet Friday with federal Employment Minister Patty Hajdu, who took to social media to urge both sides to return to good-faith bargaining.

“It’s time for everyone to put aside their differences, focus on shared goals, and ensure a strong postal system now and into the future,” she posted on X (formerly Twitter).

In an interview with CTV, CUPW negotiator Jim Gallant stated that the union was “disappointed, but not surprised,” with the contents of the Kaplan report.

“There’s, no doubt that the government ordered this report, paid for this report, and likely had some expectations of the report,” said Gallant.

Earlier this week, Canada Post temporarily paused negotiations, saying it was working to prepare proposals aligned with the corporation’s financial constraints. CUPW dismissed the move as a stalling tactic, accusing management of lacking genuine intent to reach a deal.

If no agreement is reached by May 22, the temporary reprieve granted by the federal labour board will expire, opening the door to a potential resumption of strike action.On Mon., May 19, CUPW served notice for both Urban and RSMC (Rural and Suburban Mail Carriers) bargaining units. The notices indicate that CUPW intends to begin strike activity as of Fri., May 23 at 12:00 am local time, unless the parties reach agreements before then.

While Kaplan’s report increases pressure on CUPW to compromise, it offers little in the way of incentives for workers to accept significant concessions, leaving the future of Canada’s postal system uncertain, and the public and small business with nothing but uncertainty over what happens on May 23, and how long that uncertainty will continue.