On Sunday, DHL Express Canada locked out 2,100 delivery drivers, warehouse workers, and customer service staff after failing to make progress in collective bargaining negotiations. Despite the move, the company stated that its 50,000 customers should not experience significant service disruptions.

The situation adds to growing uncertainty for Canadian parcel shippers, as Canada Post carriers refuse overtime and threaten to strike if contract talks fail. This dispute has already enabled competitors to capture a significant portion of Canada Post’s parcel business, at least in the short term.

DHL Express clients include Chinese e-commerce giants Temu and Shein, as well as Lululemon and Siemens Canada.

“We have activated contingency plans and remain committed to delivering excellent service to our customers. With these proactive measures in place, we’re pleased to confirm that our Canadian network remains operational and we do not anticipate major service disruptions,” DHL said in a statement shared by email.

The company confirmed it has hired temporary replacement workers to maintain delivery continuity.

Unifor, the union representing the locked-out workers, criticized DHL’s use of external labor ahead of a new Canadian law coming into effect on June 20, which will restrict federally regulated employers from using replacement workers during strikes. “It’s unacceptable that the company believes it can undermine our members’ right to fair and free collective bargaining with replacement labor,” said Unifor National President Lana Payne. “In our view, DHL’s actions are not only a clear sign of bad-faith bargaining but also a blatant attempt to bypass pending legislation banning replacement workers,” the union said Saturday.

DHL rejected Unifor’s claim that the labor dispute could disrupt the Canadian Grand Prix in Montreal from Friday to Sunday, noting that its Formula 1 logistics services are separate from local operations. DHL Group, based in Germany, is Formula 1’s official logistics partner, but equipment, goods, and vehicles are primarily transported by DHL Global Forwarding.

The two sides have been negotiating a new labor agreement for eight months.

Last month, DHL workers authorized Unifor to call a strike starting June 8, the date legal restrictions on such action expired. On Thursday, DHL Express Canada issued a lockout notice to the union. Unifor said its members began strike action on Sunday after being locked out.

“DHL Express remains committed to reaching an agreement with Unifor and resuming normal operations,” the company said. “We are disappointed that we have not reached an agreement with the bargaining committee. Our goal remains to offer a deal that is fair to both our hourly employees and owner-operators, while also reflecting current economic realities.”

DHL said it has offered a five-year, 15% wage increase, including 5% in the first year, new insurance coverage for certain job classifications, increased pension matching and benefits, and expanded union representation. It also seeks to revise compensation models for owner-operators in response to market changes, assuring that drivers will still receive competitive pay and enhanced vehicle reimbursement.

The union argues that DHL’s proposed concessions would negatively impact wages and working conditions, including for independent drivers. It opposes a new driver compensation model that does not pay drivers within 62 miles of a package facility for time spent reaching their routes or picking up packages and allows for more flexible worker terminations. The parties provided conflicting information on whether minimum driver guarantees would increase or decrease.

Unifor’s key demands include clean and safe restroom facilities, higher wages, better treatment of workers, and addressing concerns over surveillance and automation.

“By locking out workers, DHL chose confrontation over negotiation,” said Daniel Cloutier, Unifor Quebec Director.

Canada is not alone in facing declining mail volumes. In March, DHL announced plans to cut 8,000 jobs in Germany this year—its largest round of domestic layoffs in decades.