Canada Post reported a loss of $407 million in the second quarter, a significant decline from a $46 million profit during the same period last year. The Crown corporation announced these results on Tuesday, attributing the loss to an ongoing contract dispute and a shift in customer preferences toward other delivery services.

The decline in parcel revenue was particularly steep, dropping by over a third, which amounts to a loss of $288 million. Canada Post delivered 25 million fewer packages in the second quarter compared to the previous year. The corporation stated, "Parcels results declined sharply as the strike activity and labor uncertainty drove customers to other carriers for their deliveries."

Contract negotiations between Canada Post and the Canadian Union of Postal Workers (CUPW) have been ongoing for more than 18 months. These negotiations led to a month-long strike late last year. Earlier this month, CUPW members voted against Canada Post's final contract offer, a decision overseen by the Canada Industrial Relations Board following an order from federal jobs minister Patty Hajdu.

Canada Post has emphasized the need for a significant restructuring of its operations. This argument was supported by a report from veteran mediator William Kaplan, who stated that the Crown corporation is effectively insolvent. Kaplan's report, released in May, indicated that there is an impasse in bargaining and suggested that arbitration may not be a viable solution for the necessary restructuring.

Among Kaplan's recommendations were the introduction of community mailboxes, the elimination of home delivery except for parcels, and the closure of some post office locations in favor of franchises. He also proposed expanding parcel delivery to seven days a week, utilizing part-time and temporary employees.

CUPW members have been in a legal strike position since May 23, but their actions have been limited to a ban on overtime work thus far. The ongoing situation continues to evolve as both parties seek a resolution.