The United Kingdom, Belgium and Germany have done so. Should Canada also privatize its postal services?

The solution to Canada Post’s financial problems and uncertain future, according to one observer, is just two words: sell it.

“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 less bad. That’s basically it. There’s no way around that,” Geloso, who is also a senior fellow at the Fraser Institute, told CBC News.

“We’d better go down the road of selling it.”

Canada Post’s recent labor struggles have renewed focus on the changes that may need to be made to adapt to the future. Suggestions It has been included Less frequent mail delivery, reducing home delivery and boosting parcel post business.

But some say more radical measures are needed, such as selling or privatizing Crown.

Even before the month-long strike involving more than 55,000 postal workers, the National Postal Service was in the spotlight due to its poor financial situation. Last May, Canada Post said it could run out of operating funds in less than a year.

However, the taxpayer is 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. In the past six years, its losses have totaled $3 billion, including $748 million in 2023.

The company attributed this to a decrease in revenues from the delivery of letters and parcels, despite the increase in the volume of parcel deliveries. At the same time, the cost of delivering mail and packages is increasing.

Canada Post is also struggling to compete with more privately owned delivery companies.

Any other company facing such losses and declining demand would be forced to innovate and cut costs, or would be bought out or go bankrupt, Geloso said in a statement. Last article In The Globe and Mail.

Canada Post “lacks this incentive” because it has a monopoly on most of the letter market, he wrote, and can “simply shift the burden to consumers by raising prices.”

Instead, he says the federal government should look at how some European countries are adapting their postal services.

Ending postal monopolies

For example, the European Commission, which is responsible for proposing and monitoring new EU laws and policies, He said in 2013 that The delivery 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 go further by following in the footsteps of Belgium, the Netherlands and Germany, which have privatized their postal operations.

Because of competitive pressures, these national postal services have focused on controlling their costs, he says, the kind of focus Canada Post “will never have as long as it is a Crown corporation with a monopoly.”

However, Geloso did not mention the UK’s Royal Mail, which was privatized in 2013 and is struggling to adapt as the number of people using it continues to fall sharply. (Earlier this week, the UK government approved the sale of Royal Mail’s parent company to a Czech billionaire.)

Despite privatization, the Royal Mail has He lost millions of dollars Annually and it was Fined repeatedly By UK regulator Ofcom for failing to meet its delivery targets.

These shortcomings are linked to the fact that the British government requires Royal Mail to deliver to more than 30 million premises in the UK, six days a week, says Paul Symonds, a former assistant professor at Warwick Business School.

“This requirement… has been around for a long time major and beloved “A thorn in the Royal Mail’s side,” Symonds wrote last year for The Conversation.

Privatizing the Postal Service brings legislation and an oversight group to make sure “your mission as a country is still getting done by the post office,” says Marvin Rader, an associate professor at the DeGroote School of Business at McMaster University in Hamilton.

He said that the regulations and orders issued by that group have a significant impact on profit, which means that these privatized postal services make little money.

“Despite experiencing these examples, it is not at all clear to me that there is one shining example of something truly remarkable,” Ryder said.

Ian Lee, an associate professor at Carleton University in Ottawa, who wrote his doctoral thesis on the future of Canada Post, He says it’s difficult to compare Canada with European countries because of the latter’s high population density.

“This changes the economy…this changes everything,” he said. “This is why using European examples doesn’t work. It doesn’t work because they have huge densities.”

“(Those) measurements are not legitimate because the cost structure in Europe is radically different due to its density.”

Ryder says privatization of Canada Post is certainly possible, but it raises questions, including who would want to buy it? The private sector has so far only shown interest in delivering packages – not letters.

“So, if you want to sell out, who wants to come in and do the other one?”