The Future of Canada Post
In Germany, that bastion of socialism, the Post Office is a publicly traded corporation with divisions that operate all around the world. It’s a big business, and it extends far beyond lettermail in Germany. Who was the radical right-winger that approved this? None other than the former socialist Chancellor Gerhardt Schroeder.
In Japan, the Prime Minister called and decisively won an election on the issue of breaking up the postal monopoly (which is a behemoth that includes insurance and banking services).
In the UK, the nominally “Labour” government of Tony Blair put in place the process of getting the government out of this business.
So, what are we doing in Canada? Nothing.
In fact, Canada Post is a Government-owned Crown Corporation that has free reign to delve into any competitive business they would like. While this is probably a good direction for Canada Post after they are privatized, it is bad for business right now.
Here are some arguments as to why privatizing Canada Post would be a positive development:
- The only reason Canada Post is profitable is because of the areas where they compete directly with private business at reduced interest and borrowing costs (as compared to non-government businesses). The lettermail business is not profitable in Canada, as evidenced by 1 penny increases the last 3 years to mail a letter. If you privatized Canada Post, business efficiencies and marketing prowess could help make lettermail profitable.
- We live in an Internet age. Canada Post has been launching many online services that compete directly with private companies, often small businesses. Why should a government-sponsored corporation be free to do so? If you privatized it, they could compete openly, and use their size to both become an Internet consolidator and technology incubator. Rather than hurt the Internet industry in Canada, they could become a positive contribution to it.
- Canada Post is required to keep their Purolator courier business as a separate division and is restricted in their cross-selling. Numerous lawsuits have been fought against Canada Post for unfair business practices vis-a-vis Purolator and other courier companies. Again, as long as they are government-owned, this is an important way of preventing them from competing unfairly against private business. But, privatize Canada Post and you will free them up to compete fairly. Why shouldn’t Purolator become a world-class competitor like the German Post Office’s DHL Courier service?
- The biggest argument against privatizing Canada Post has come from those who were concerned that smaller communities would not be served well. So, rather than privatizing and allowing Canada Post to offer a wider array of services without any regulations, the Government made pledges to keep unprofitable post offices open in all manner of small communities. This is a liability for Canada Post. If Canada Post could be privatized and could offer other services, these small post offices could actually become profitable businesses.
I don’t think the employees, the management or even the culture of Canada Post are a problem. I am not anti-Canada Post. Many developments at Canada Post in the last two decades have been positive. Mostly, my point is that it is being held back by its ownership structure, and should be freed up to do bigger and better things, without harming the economy.
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