According to one observer, the solution to Canada Post's financial problems and unclear future are just two words: Sell.
“I'm not sure you can make any adjustments,” said Vincent Geloso, an assistant professor of economics at George Mason University in Fairfax, Virginia.
“The best thing you can do is make them not suck so much. That's basically it. There's no way around it,” Geloso, who is also a senior fellow at the Fraser Institute, told CBC News.
“It's better if we just go the sales route.”
Recent labor conflicts at Canada Post have renewed attention on what changes need to be made to adapt to the future. Suggestions contained less frequent postal deliveries, reduced home deliveries and strengthened courier operations.
But some argue that more drastic action is needed, such as selling or privatizing the Crown corporation.
As postal workers return to work on Tuesday morning, questions remain about how the country's postal service can adapt to the changing needs of Canadians.
Even before a month-long strike by more than 55,000 postal workers, the country's postal service was in the spotlight for its dismal financial situation. In May, Canada Post reported that it could run out of operating funds in less than a year.
However, taxpayers are not burdened with losses; Canada Post relies on the sale of postal products and services. Despite this, it has been losing money since 2018. Its losses totaled $3 billion over the past six years, including $748 million in 2023.
The company blames this on the decline in revenues from letter and parcel deliveries, despite the increase in the volume of parcel deliveries. Meanwhile, the costs of delivering mail and parcels are rising.
Canada Post also had difficulty competing with more private courier companies.
Any other company – facing such losses and falling demand – would be forced to innovate and cut costs or be bought out or go bankrupt, Geloso said in recent article in The Globe and Mail.
Because of its monopoly over much of the letter market, Canada Post “lacks that incentive,” he wrote, and can “simply pass the burden on to consumers by raising prices.”
Instead, he says the federal government should look at how some European countries have adjusted their postal services.
No more postal monopolies
For example, the European Commission, which is responsible for proposing and monitoring new EU laws and policies, he said this in 2013 the delivery of all letters, regardless of weight, was open to competition. (In Canada, only Canada Post can deliver mail.)
Such open competition would end monopolies and lead to greater cost control, Geloso argues.
But he says Ottawa could go further, following the example of Belgium, the Netherlands and Germany, which have privatized their postal operations.
Due to competitive pressures, the national postal service has focused on controlling its costs, he argues, the type of focus that “Canada Post will never have as long as it is a Crown corporation with a monopoly.”
But Geloso makes no mention of Britain's Royal Mail, which was privatized in 2013 and has struggled to adapt as the number of people using the service continues to plummet. (Earlier this week, the UK government approved the sale of Royal Mail's parent company to a Czech billionaire.)
Despite the privatization of Royal Mail, yes he lost millions of dollars every year and it was punished many times by UK regulator Ofcom for failing to meet supply targets.
These shortcomings are related to the British government requiring Royal Mail to deliver to more than 30 million UK branches six days a week, says Paul Simmonds, a former adjunct professor at Warwick Business School.
“This requirement… has existed for a long time major AND Dear a thorn in the side of Royal Mail,” Simmonds wrote for The Conversation website last year.
Marvin Ryder, an associate professor at the DeGroote School of Business at McMaster University in Hamilton, says privatizing the postal service involves legislation and an oversight group to make sure “the Postal Service continues to fulfill your mission as a country.”
Regulations and the stream of orders from this group have a significant impact on profits, which is why privatized postal services earn little, he added.
Publicly funded mail delivery systems have been privatized in other countries, including the UK and Germany. Although Canada Post is a Crown corporation, it is not funded by taxpayers and is expected to maintain operations by selling its services, although it is required by law to deliver to all addresses in Canada. But is it time for privatization? Marvin Ryder, a marketing professor at McMaster University, spoke to CBC News about this prospect.
“Even though these models are being tried, it's not clear to me at all that there is one outstanding example of something truly brilliant,” Ryder said.
Ian Lee, an associate professor at Carleton University in Ottawa who wrote his doctoral thesis on the future of Canada Post, claims that it is difficult to compare Canada with European countries due to the latter's high population density.
“It changes the economy… it changes everything,” he said. “And that's why using European examples doesn't work. It doesn't work because they have phenomenal density.”
“(These) analogies are not justified because the cost structure in Europe is so radically different due to its density.”
Privatizing Canada Post is certainly doable, but it raises questions including who would want to buy it, Ryder says; the private sector has so far only shown interest in delivering parcels, not letters.
“So if you want to sell the bolt, stock and barrel, who wants to come in and make the other one?”