Mr. Speaker, small and medium-sized enterprises, SMEs, are the backbone of Canada's economy. These enterprises represent over 99% of business activities in the country. Moreover, they provide nine out of 10 private sector jobs that Canadians depend on. Their annual merchandise exports are valued in the billions of dollars, and if these firms can fully access e-commerce opportunities, they will be well positioned to make even greater contributions to the Canadian economy.
Trade has the potential to provide SMEs increasing returns to scale, enhance their competitive and innovative edge, and spur productivity. Increased trade by SMEs can play a role in boosting Canada's overall economic growth and prosperity. However, we also need to support the growth and development of SMEs here in Canada by ensuring that they have the tools they require to strive.
When the mail does not flow, then trade slows. A disruption to traditional delivery services is either bringing our domestic and international trade to a halt or forcing businesses to use costly substitute services.
We know that the ongoing disruption has been keenly felt by Canadian businesses. Over two-thirds of small businesses report a negative impact on their business. Over half have reported having to switch to higher-cost delivery services. Many note delayed shipments to customers. In a highly interconnected and competitive global economy, this disruption could lead to lost customers, lost market share and, ultimately, lost jobs. If SMEs cannot engage in international trade, they will miss out on real opportunities to scale-up and create jobs.
One of the most important vehicles for getting more SMEs into international trade is e-commerce. E-commerce has emerged as a leading platform for doing business across all sectors of the economy and, by extension, for international trade. Facilitating the use of e-commerce by consumers and businesses is a key trade policy objective for Canada.
Canada is seeking to encourage the use of e-commerce through a combination of removing, reducing and minimizing impediments to e-commerce while creating an environment of trust, certainty and choice for consumers and businesses. E-commerce is changing the ways firms do business, and it can increase their sales and market share while reducing the time and effort required to complete transactions.
For Canada's small and medium-sized enterprises, e-commerce platforms or information technology systems that enable lnternet-based business transactions provide access to trillions of dollars annually from the global online marketplace. However, as more sales occur online, firms that do not engage in e-commerce might lose market share to competitors that do. SMEs that may lack access to the same financial and human resources as large firms have may be particularly vulnerable if they less able to use new technologies, such as e-commerce platforms, to do business.
The disruption in these services creates many knock-on effects for businesses, especially with the increase in parcel mail and e-commerce. When Canada Post stops accepting freight, mail order and e-commerce companies stop shipping. When these companies stop shipping, they stop ordering too, because they have a surplus of inventory. This results in increased capacity in transportation firms, including ports, rail and trucking. These firms have to reduce the hours of their employees.
We have heard from e-commerce businesses that their operations have been impacted, since consumers are placing fewer orders by as much as 20% to 30%.
Smaller e-commerce companies may be disproportionately affected, given their razor-thin margins. These companies cannot afford the higher costs of shipping through courier companies. Rather than risk damaging their reputations with late deliveries, we have learned that many Canadian companies have cut back on selling and shipping.
This is about serving Canadians. While there are private delivery companies that compete with Canada Post for business, there is an ongoing concern that these cannot replace Canada Post's e-commerce customer base during this critical time for Canadian business. This constraint is especially prevalent in rural areas which are only serviced by Canada Post. This strike is having a disproportionate impact on rural SMEs and Canadians.
This legislation is a last resort, not something the government and the parties are taking lightly. The government has done everything it can to support and encourage the parties to reach a negotiated settlement. The government has a responsibility to Canadians and businesses with respect to this work stoppage, which has had a very harmful impact. The government must move now. That is why this legislation is a last resort.