Great Britain, Belgium and Germany did. Should Canada also privatize its postal service?
The solution to Canada Post’s financial problems and bleak future, according to one observer, is just two words: Sell.
“I’m not sure you can make any adjustments,” said Vincent Geloso, an economics professor at George Mason University in Fairfax.
“The best thing you can do is not nurse them so badly. That’s what it is. There’s no way around it,” Geloso, a senior fellow at the Fraser Institute, told CBC News.
“It’s better if we go the selling route.”
Canada Post’s recent labor conflict has renewed focus on what changes can be made to adapt to the future. Offers have entered less frequent mail delivery, limiting home delivery and strengthening the parcel post business.
But some argue that more drastic measures are needed, such as selling off or privatizing the Crown corporation.
As postal workers return to work Tuesday morning, questions remain about how the national postal 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. In May, Canada Post said operating funds could run out in less than a year.
However, taxpayers aren’t on the hook for his losses; Canada Post is funded by the sale of postal products and services. Still losing money since 2018. Its losses over the past six years totaled $3 billion, including $748 million in 2023.
The corporation attributed this to a decline in revenue from letter and parcel delivery, despite an increase in the volume of parcel deliveries. Meanwhile, postage and parcel delivery costs are rising.
Canada Post also found it difficult to compete with more private delivery companies.
Geloso said any other company facing such losses and falling demand would be forced to innovate and cut costs, or be bought out or go bankrupt. last article In The Globe and Mail.
Because it monopolizes much of the letter market, Canada Post “lacks that incentive” and “can simply shift the burden on consumers by raising prices.”
Instead, he says, the federal government should look at how some European countries have adapted their postal services.
End postal monopolies
For example, the European Commission, which is responsible for proposing and overseeing new EU laws and policies, He said in 2013 delivery of all letters, regardless of weight, was open to competition. (In Canada, only Canada Post can deliver letters.)
Geloso says such open competition would end monopolies and do more to control costs.
But he says Ottawa could go further by following the lead of Belgium, the Netherlands and Germany, which have privatized their postal operations.
Due to competitive pressures, these national postal services have been directed to control their costs, which he says “will never happen as long as Canada Post is a monopoly Crown corporation.”
Geloso, however, does not mention the UK’s Royal Mail, which was privatized in 2013 and is struggling to adapt as the number of its users continues to plummet. (Earlier this week, the UK government approved the sale of Royal Mail’s parent company to a Czech billionaire.)
Despite privatisation, there is Royal Mail lost millions of dollars every year and has been has been fined many times As it failed to meet delivery targets set by UK regulator Ofcom.
Paul Simmonds, a former associate professor at Warwick Business School, says the shortfalls are due to the British government requiring Royal Mail to deliver to more than 30 million buildings across Britain six days a week.
“This request… has been around for a long time Major and expensive Royal Mail has a thorn in its side,” Simmonds wrote for The Conversation website last year.
Marvin Ryder, an associate professor at McMaster University’s DeGroote School of Business in Hamilton, says privatizing the postal service brings legislation and a legislative and oversight team to make sure “your mission as a country is still being fulfilled by the post office.”
According to him, the regulations and the flow of orders from this group have a significant impact on profits, which means that these privatized postal services generate little revenue.
In other countries, including the UK and Germany, publicly funded mail delivery systems have been privatized. Although Canada Post is a Crown corporation, it is not funded by taxpayers and is expected to stay in business by selling its services, even though it is required by law to deliver to all Canadian addresses. But is it time to privatize it? Marvin Ryder, associate professor of marketing at McMaster University, spoke to CBC News about the prospect.
“Even though these models have been tested, it’s not clear to me that there is one shining example of something really brilliant,” Ryder said.
Jan Lee, associate professor at Carleton University in Ottawa, who wrote her PhD thesis on the future of Canada Post, He says it is difficult to compare Canada with European countries because of its high population density.
“It changes the economy … it changes everything,” he said. “And that’s why using European samples doesn’t work. It doesn’t work because they have phenomenal density.”
“(These) analogies are not legitimate because Europe’s cost structure is very different in terms of density.”
Privatizing Canada Post is certainly possible, but that raises questions, Ryder says, including who would want to buy it; the private sector has so far only shown interest in delivering parcels, not letters.
“And if you want to sell it lock, stock, and barrel, who wants to come and do the other one?”
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