Failure to modernise the post service could destroy the Royal Mail, its chief executive Adam Crozier has warned as further talks on unofficial strikes continue.
The backlog will take days to clear even after a resolution is found
Speaking to BBC One's Breakfast with Frost programme, Mr Crozier said the company must turn itself around because it had lost £1.8bn over the last two years and faced increased competition.
He said there was still a "pretty long way to go" in the talks with union leaders which resumed on Sunday afternoon, although the aim was to get people back to work ahead of detailed negotiations at conciliation service Acas.
With more than 20,000 workers now on strike in London and more than a dozen regional centres, union leaders said the complaints of staff were "complicated" but that progress had been made.
'Fit to compete'
Mr Crozier said unofficial strikes cost Royal Mail 66,000 working days in 2001 and that it was still considering legal action over the current walkouts.
He added: "We have to make provisions today that will allow us to be fit to compete for the next 10 or 20 years.
"We've got competition coming in very quickly from electronic media and also from the regulator which is bringing in other carriers.
"If we don't sort this out, if we don't modernise now, we won't have a future to think about."
Despite the remaining problems, Mr Crozier said he was hopeful a compromise could be reached, following progress on Saturday.
WHERE IS THE DISRUPTION?
London services extremely disrupted, most post boxes sealed and people advised not to post letters
Special Delivery services suspended in London
Other areas affected include: Chelmsford, Colchester, Coventry, Maidstone, Milton Keynes, Oxford, Portsmouth, Slough, Southend, Stoke-on-Trent and Swindon
Speaking after the end of talks on Saturday, CWU deputy general secretary Dave Ward said the causes of the dispute involved many offices and many local working practices.
"We do want to find a solution that will get our members back to work very quickly and also restore service to the public as soon as possible," he said.
BBC correspondent Stephen Cape said it was understood the two sides had agreed strikers would not face disciplinary proceedings, unless it was proved they had been involved in violence, bullying or intimidation on the picket line.
Deliveries continue to be seriously affected in London and elsewhere, with post boxes sealed up in the capital.
He said a number of "sticking points" remained.
Those include the implementation of a national agreement on overtime, and movement towards introducing single deliveries in London.
Allegations and counter-allegations over bullying and intimidation are also a source of friction, our correspondent said.
Royal Mail claims to have evidence that fireworks and bricks were thrown at those refusing to strike, while the union has talked of a manager driving a van at one of its members.
On Saturday the Royal Mail admitted encouraging managers to spy on striking staff.
The firm said it was "only right" to try to collect evidence of activities provoking unlawful strikes as a prelude to possible court action.