Give Canada Post a Break: Allowing More Pricing Flexibility and Competition Could Help the Corporation Succeed

Give Canada Post a Break: Allowing More Pricing Flexibility and Competition Could Help the Corporation Succeed

by pmnationtalk on February 11, 2016439 Views

Canada Post’s lettermail volumes are plummeting, largely due to the explosion of electronic communication, with no evident sign of stabilizing. E-commerce parcel deliveries are on the rise, but not nearly at the rate necessary to offset the decline in lettermail, and there are many private courier companies competing for that business. Meanwhile, even as the number of Canadian home addresses continues to increase, Canada Post’s plan to end the remnants of door-to-door home delivery, had to be halted in light of the new Liberal government’s promise to maintain the service. The extraordinary disruption that electronic media has caused to the model of state-owned postal services, with their mandate to provide universal delivery, may seem dire. And the threat is indeed urgent. But there are solutions to help Canada Post remain healthy in reforms that have occurred to postal systems elsewhere.

This does not necessarily mean immediate privatization (although that has been achieved with some success in Europe): The burden of universal service obligations in a country as expansive and minimally populated as Canada is, could make it difficult for the government to realize appropriate value in selling Canada Post. But if the Liberal government intends to help Canada Post endure in this environment, it should allow the corporation to introduce some basic elements of competition and market-based reform.

The reality is that most Canadian mail today is sent by large firms to customers and other businesses. And most mail is delivered in urban areas, where delivery costs are lowest. But because Canada Post is required to charge identical prices to all customers, urban households essentially help subsidize the postage costs of big business and rural recipients. This need not be the case: Canada Post would be more successful if it could charge varying rates (capped at a maximum) based on the type of sender,

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