According to one observer, the solution to Canada Post's financial woes and bleak future is just two words: sell it.
“I'm not sure you can make any tweaks,” said Vincent Geloso, an assistant professor of economics at George Mason University in Fairfax, Va.
“The best you can do is make them not hold back. That's essentially it. There's no way around it,” Geloso, also a senior fellow at the Fraser Institute, told CBC News.
“It would be better if we went down the road of selling it.”
Canada Post's recent labor conflict has focused attention on what changes must be made to adapt to the future. suggestions are included Less frequent mail delivery, limiting home delivery and growing its parcel mail business.
But some argue that more drastic action is needed, such as selling off or privatizing Crown corporations.
As postal workers return to work Tuesday morning, questions remain about how the national mail service can adapt to the changing needs of Canadians.
Even before the month-long strike by more than 55,000 postal workers, the National Postal Service was in the spotlight for its dire financial situation. Back in May, Canada Post said it could run out of operating funds in less than a year.
However, taxpayers are not on the hook for its losses; Canada Post is funded by the sale of postal products and services. However, it has been losing money since 2018. Its losses have totaled $3 billion over the past six years, including $748 million in 2023.
The corporation has alleged that despite the increase in the volume of package delivery, the revenue from the delivery of letters and parcels has decreased. Meanwhile, the cost of mail and parcel delivery continues to rise.
Canada Post has also struggled to compete with privately owned delivery companies.
Any other company — faced with such losses and declining demand — would be forced to innovate and cut costs, or else be bought out or bankrupt, Geloso said in one. Recent articles In the Globe and Mail.
Because of its monopoly in most of the mail market, Canada Post “lacks this incentive,” he wrote, and “can pass the burden on to consumers by raising prices.”
Instead, he says the federal government should look at how some European countries have adapted their postal services.
End the postal monopoly
For example, the European Commission, which is responsible for proposing and monitoring new EU laws and policies, said in 2013 The distribution of all letters, regardless of weight, was open to competition. (In Canada, only Canada Post can deliver letters.)
Such open competition would end monopolies and do more to control costs, Geloso says.
But, he says, Ottawa could move forward by following the lead of Belgium, the Netherlands and Germany, which have privatized their postal operations.
Because of competitive pressures, those national postal services have focused on controlling their costs, he says, a focus that “would never happen unless Canada Post became a monopoly Crown corporation.”
Geloso does not mention the UK's Royal Mail, which was privatized in 2013 and is struggling to adapt as the number of people using it drops sharply. (Earlier this week, the UK government approved the sale of Royal Mail's parent company to a Czech billionaire.)
Despite privatisation, Royal Mail is Millions of dollars lost Annually and has been Frequent fines for failing to achieve its delivery targets by UK regulator Ofcom.
Those shortfalls relate to the British government requiring Royal Mail to deliver six days a week, to more than 30 million UK premises, says Paul Simmonds, a former assistant professor at Warwick Business School.
“This need … has been around for a long time a chief and expensive A thorn in Royal Mail's side,” Simmonds wrote for The Conversation website last year.
Marvin Ryder, associate professor at McMaster University's DeGroot School of Business in Hamilton, says privatizing the postal service brings together laws and oversight groups to make sure “your mission as a country is still being fulfilled by the post office.”
The flow of regulations and orders from that group has a significant impact on profitability, meaning these privatized postal services make less money, he said.
Publicly funded mail delivery systems have been privatized in other countries, including the UK and Germany. While Canada Post is a Crown corporation, it is not funded by taxpayers and is expected to stay in business through the sale of its services, although it is required by law to deliver to all Canadian addresses. But is it time to privatize? Marvin Ryder, associate professor of marketing at McMaster University, spoke to CBC News about the possibility.
“Although these models have been tried, it's not clear to me that there is a shining example that is truly spectacular,” Ryder said.
Ian Lee, an associate professor at Carleton University in Ottawa, who wrote his PhD thesis on the future of Canada Post., Because of the high population density of the latter, it is difficult to compare Canada with European countries.
“It changes the economy … which changes everything,” he said. “And that's why using European examples doesn't work. It doesn't work because they have unprecedented densities.”
“(Those) analogies are not valid because the cost structure of Europe is very different due to their density.”
Privatizing Canada Post is certainly possible but it raises questions, including who would want to buy it, Ryder says; The private sector has so far shown interest only in parcel delivery – not letters.
“So if you want to sell it lock, stock and barrel, who wants to come in and do another one?”
