Business
In This Article:
Among the purported advantages of regular mail delivery is its predictability. These days, however, the only thing predictable about Canada Post is the frustration.
The federal government’s desperate solution to last year’s mail strike — a back-to-work order that solved none of the underlying problems — is already unravelling. Pending the outcome of current negotiations, mail carriers could be back on strike starting May 22. Fortunately, there’s a far better and more permanent solution to the endless labour woes at Canada Post: privatization.
Around the world, postal services are suffering an existential crisis as texts, email and online bill payments have shoved mail volumes off a cliff. In Canada, letter mail is down 65 per cent over the past two decades. Making matters worse, for political reasons Ottawa has blocked Canada Post’s efforts to rationalize its operations through service reductions or by shuttering unprofitable postal outlets. Since 2018 Canada Post has lost a cumulative $3 billion.
Until now these losses have been sustained by drawing down capital reserves. But that can’t go on forever. In January, Ottawa lent the Crown corporation $1 billion “to maintain its solvency and ensure it can continue operations.” Bankruptcy is now a real possibility. If that happens, taxpayers will be on the hook for the entire mess.
Ottawa could amend the national postal charter and end expensive daily delivery, door-to-door service and stand-alone post offices, all of which would reduce the employee head count substantially. Canada Post is also trying to diversify its income by offering banking services and getting into other quirky business lines. But the only way to truly insulate taxpayers from the looming financial crisis is to unload the whole operation.
“There’s no particular reason why the government should be in charge of mail delivery,” says Vincent Geloso, a professor of economics at George Mason University in Virginia and senior economist at the Montreal Economic Institute. Public monopolies such as Canada Post inevitably deliver low-quality, expensive service, he observes.
Liberalizing the mail business to allow private firms to compete and then selling off Canada Post wouldn’t just improve service for Canadians, it would also protect them from having to bail out the Crown corporation if and when bankruptcy happens. For proof of the benefits of privatization, Geloso points to Europe, which has more than a decade’s worth of experience with private mail delivery.
The crowning example is Germany’s highly-profitable and well-respected Deutsche Post. Last year it tied for top spot in rankings by the Universal Postal Union, a UN agency that rates the performance of 174 global postal operators. (Canada Post came 15th.) Not only does Deutsche Post deliver the mail quickly, efficiently and inexpensively, it makes money doing so. According to its most recent financial statements, DHL Group, which includes Deutsche Post and parcel carrier DHL, booked a net profit of $5.1 billion — and that’s not a case of the parcel business carrying Deutsche Post: it made more than $1.2 billion from its own operations. Canada Post has never, ever had a year like that.