DHL Express on Tuesday will stop accepting shipments headed to Canada and for export as its Canadian subsidiary prepares to suspend operations Friday amid an escalating labor dispute.

DHL Express Canada brought in replacement workers after locking out 2,100 independent drivers, warehouse pickers and other members of the Unifor trade union on June 8 in response to stalled talks on a new collective bargaining agreement. The union had threatened to go on strike without a new contract. The parcel courier at the time warned customers to expect shipping delays of two to three days.

Legislation prohibiting the use of replacement workers, scheduled to take effect June 20, forced DHL’s hand. Under the new law, employers face financial penalties for using replacement workers during a labor dispute.

In a Monday notice on its website, DHL Express Canada said an indefinite shipment embargo will begin at midnight Tuesday and that all operations will be suspended at midnight Friday.

“Due to the recent implementation of new labor legislation in Canada, DHL Express is not able to deploy replacement workers or other necessary contingency measures to mitigate the impact of labor action and maintain its high standard of service quality,” the company said.

“DHL Express will continue to engage constructively and in good faith with Unifor over a new collective agreement that provides fair compensation to team members while ensuring a sustainable, long-term foundation for the company’s operations in Canada. DHL’s priority is to reactivate normal service to and from Canada as soon as possible,” the statement read.

DHL offered a 15% wage increase over five years, with a 5% increase in the first year of the contract, new premiums for certain job classifications, increased pension match and benefits, and increased union representation rights. It also seeks to revise the compensation model for owner-operators in response to changing market conditions. It says drivers would still receive highly competitive compensation and increased reimbursement for vehicles.

The union says DHL is demanding concessions that would negatively impact pay and working conditions for DHL members, including independent drivers. It objects to a new driver pay system that would not compensate drivers within 62 miles of a package facility to get to their routes or pick up freight, and to greater latitude for laying off workers. The parties have issued conflicting information about whether drivers would see minimum guarantees increase or decrease.

Besides wages, other Unifor priorities include access to clean washrooms, surveillance and automation issues, and worker treatment.

The DHL Express suspension of parcel service coincides with a labor dispute at Canada Post where workers are refusing to work overtime, which is slowing some deliveries.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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