In late September, Ottawa announced a series of reforms to Canada Post, underscoring a rising discontent regarding the mail and parcel carrier. These changes include the elimination of door-to-door service and a slowdown in deliveries, which are projected to save the Crown corporation millions of dollars annually.
Unionized workers initiated a weeks-long national strike, which evolved into rotating stoppages, characterizing the reforms as an "attack" on their employment. Many Canadians voiced their frustration over the anticipated reduction in service, while others argued that their tax dollars should not assist an antiquated operation. These developments prompt questions about the future of the 150-year-old institution and its necessary evolution in an era where digitization and private competitors pose significant threats to its existence.
Experts suggest that Canada Post could benefit from examining the experiences of international counterparts, particularly the United States Postal Service (USPS) and the U.K.'s Royal Mail. Ian Lee, an associate professor at Carleton University's Sprott School of Business, claims that the USPS serves as the best comparison for Canada Post, given the similar challenges both face and the solutions they have explored.
Lee emphasizes that digitization—from the rise of social media to the proliferation of electronic billing—has adversely impacted mail carriers globally. The geographical challenges of Canada, the U.S., and Australia further complicate the traditional mail delivery model due to their vast sizes coupled with relatively sparse populations, making mail delivery significantly more costly and difficult.
According to Lee, the USPS has sought to alleviate its challenges through partnerships with private couriers, allowing them to focus on the "last mile" of delivery while outsourcing sorting tasks. He notes that Canada Post could similarly adapt by forging partnerships with companies like Amazon if it can reorganize itself effectively.
As part of the recent reforms, the federal government terminated a moratorium on community mailbox conversions, permitting Canada Post to convert four million addresses that still receive door-to-door delivery. Simultaneously, the moratorium on closing rural post offices has also ended, aiming to reduce duplication in overserved areas. Additionally, non-urgent mail deliveries are now slated to be transported by ground rather than air, reflecting the decline in mail volumes and saving Canada Post an estimated $20 million annually.
Despite these measures, the Canadian government reported losses of about $10 million daily for Canada Post, even after providing a $1-billion injection earlier in the year. Since 2018, the organization has accumulated losses exceeding $5 billion, including more than $1 billion in just the previous year. However, Ann Armstrong, a professor at the University of Toronto's Institute for Management and Innovation, argues that Canada Post's business model is meant to sustain communities across the nation, especially in remote areas, rather than prioritize profit. She advocates for preserving the service while making necessary cost adjustments.
Armstrong also suggests that Canada Post should explore innovative services, highlighting the expansion of the Japanese postal carrier into banking services as an example. The Universal Postal Union reported that 84 percent of its member countries offer some form of financial service through their mail carriers. Earlier this year, Canada Post launched a spending and savings account called the Canada Post MyMoney Account in collaboration with Koho Financial Inc., featuring cash back options and ways to earn interest.
The union representing Canada Post workers has called for a more comprehensive postal banking system, noting the historical precedent for such services in Canada until their closure in 1969. Modern systems worldwide often include comprehensive banking services, such as online banking, debit and credit cards, and money transfers.
In contrast, the Royal Mail in the U.K. offers a different case study after being privatized in 2013. Its financial performance has varied, with recent profits followed by significant losses. However, its privatization has enabled it to reform operations and compete with other carriers while maintaining essential delivery services. Michael Anderson, a former Royal Mail executive, explains that the company has adapted to offer quick delivery options and improved tracking services to meet the needs of e-commerce firms.
Despite Royal Mail's successes, Anderson acknowledges the geographical and demographic challenges that differentiate it from Canada Post's operational landscape. Due to Canada's lower density, Lee expresses skepticism about whether Canada Post can achieve a transformation akin to that of its European counterparts. Instead, he envisions a future where Canada Post primarily focuses on parcel delivery as dependence on traditional mail continues to wane.
Nevertheless, Armstrong warns against sacrificing Canada Post's core mission for profit. She insists its fundamental purpose should be to foster community connections, with any profits being a welcomed bonus rather than the primary objective.
