Purolator, UPS pause shipments from couriers amid Canada Post strike

Purolator and UPS have paused shipments from some courier companies as they try to work through a deluge of deliveries brought on by the Canada Post strike, creating even bigger backlogs at the height of the holiday shipping season.

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"The Purolator network is currently experiencing service disruptions due to severe weather and a significant increase in volume," the company said in an email.

It froze service for some partners this week, citing the need to ensure employee safety and "prioritize critical shipments."

Alternative couriers such as eShipper and ShipTime act as middlemen between smaller e-commerce companies and large carriers including Purolator and UPS. The couriers bundle packages sent by small businesses to secure lower rates than the mom-and-pop shops could get through individual orders with the big players.

Now, eShipper is among the outfits temporarily barred from sending packages through UPS and the Canada Post-owned Purolator.

A notice sent from eShipper to clients and obtained by The Canadian Press says "no shipments will be processed or moved by these carriers" for 48 hours, starting Wednesday.

UPS did not respond to requests for comment.

The temporary bans speak to a shipping network strained to the breaking point, with implications for customers and shippers -- including eShipper's 22,000-plus clients.

One of them, Montreal-based Felix & Norton, which ships gourmet cookies across the country, says the cargo halt and broader postal strike fallout could cost the company its "whole holiday season."

"This is absolutely insane and infuriating for everybody that doesn't even use Canada Post," chief operating officer Simon Paquin said, stressing the ripple effects of the work stoppage.

Most of Felix & Norton's business relies on shipped cookies rather than baked goods bought in-store, putting it among the retailers frantically searching for workarounds.

Big carriers such as Purolator, UPS, FedEx, Canpar and DHL are "not equipped" to pick up all the slack left by the Canada Post shutdown, said Paquin.

"They're overloaded, I'm hearing, until after the holidays ... we can't even process orders anymore because there's no shipping available."

The bakery is scrambling to arrange alternate deliveries in Montreal and Toronto by last-mile carriers, which typically deliver packages from a shipping hub to the buyer's doorstep.

"But let's say you've got to deliver something in the north of Quebec, you just can't anymore. I will lose a lot of business for sure," he said.

Canada Post said Thursday it was reviewing new counter-proposals submitted by the union representing more than 55,000 postal employees, who walked off the job three weeks ago.

The sticking points include wages and a push to expand into weekend delivery, with the two sides in disagreement over how to staff the expansion.

Calls for federal intervention have been mounting from the business community, but so far the government has said it's not stepping in.

Canada Post handled 296 million parcels last year, or nearly 811,000 per day. That's a big hole for private operators to plug, even if it represents just 29 per cent of the parcel market, according to the Crown corporation.

Alternative shippers and last-mile couriers are among the few companies poised to benefit from the gap in the market left by Canada Post's absence -- territory it may have trouble reclaiming once the labour dispute is resolved.

"We're just trying to keep up," said Kevin Ham, CEO of Chit Chats. The e-commerce shipping platform has acquired "record numbers" of clients over the past three weeks, he said.

And when delivery capacity shrinks, shipping prices rise -- all the more so during peak holiday demand.

Montreal-based pantyhose maker Sheertex has said alternative carriers, overloaded with orders, have implemented "significant surge pricing" on shipments.

 

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"This is where nimble startups with a van are going to try and step in wherever possible," said Ulrich Paschen, an instructor at the Melville School of Business at Kwantlen Polytechnic University in Surrey, B.C.

"Obviously, the network that Canada Post has is not that easily replicated. But I know that in a number of areas, Canada Post will have to struggle to regain what they've lost."

In the meantime, the strike may deter customers from shipping due to the backlogs and the cost, hurting small businesses further.

"We'll charge $80 to ship a $50 gift. And they're like, 'That costs more than my gift,"' said Timothy Byrnes, director of Jet Worldwide, a parcel delivery firm.

Byrnes said some carriers are narrowing their profit margins in a bid to accommodate small shippers, but that the rates still can't match the low fees charged by Canada Post.

"Even if they wanted to pay double the rate, UPS and Purolator are just saying, 'Sorry, we're backed up."'

With files from Rosa Saba in Toronto

This report by The Canadian Press was first published Dec. 6, 2024.