Tag: Canada Post

The federal government should end Canada Post’s monopoly on the postal market and follow the leads of Germany and the Netherlands in introducing competition to the sector, says the C.D. Howe Institute.
“We believe the case for demonopolizing the Canadian postal sector and moving to some substantial degree of private ownership is compelling and consistent with developments in jurisdictions beyond Canada,” the think-tank said yesterday in a report. “Failure to rethink the role and mandate of Canada Post, given the dramatic technological transformation that is occurring in the communications sector, would be to acquiesce in a slow-motion train wreck.”
Canada Post has a monopoly over the domestic letter mail market, and is obligated to provide service at uniform rates across the country. For the 2005 fiscal year — the last for which numbers are available — the Crown corporation posted profit of $199-million on revenue of $6.9-billion. Canada Post has earned a profit in each of the past 11 years.
Despite this streak, the C.D. Howe study said the Crown corporation faces major structural challenges. Mail volumes are decreasing even though the number of addresses continues to grow, by roughly 250,000 a year. This is due in large part to business and residential customers favouring electronic forms of communication.
Moreover, Canada Post faces increased competition in international shipping and delivery.

Canada Post Due for Big Changes: C.D. Howe Institute Study

As change sweeps the postal sector, major reforms are due at Canada Post, according to a C.D. Howe Institute study released today. In Rerouting the Mail: Why Canada Post is Due for Reform, authors Edward M. Iacobucci and Michael J. Trebilcock, Professors in the Faculty of Law, University of Toronto, and Tracey D. Epps, Lecturer in Law, University of Otago, recommend that Canada Post, the government-owned monopoly, should ultimately be privatized, with an eye to improving postal performance.

As change sweeps the postal sector, major reforms are due at Canada Post, according to a C.D. Howe Institute study released today. In Rerouting the Mail: Why Canada Post is Due for Reform, authors Edward M. Iacobucci and Michael J. Trebilcock, Professors in the Faculty of Law, University of Toronto, and Tracey D. Epps, Lecturer in Law, University of Otago, recommend that Canada Post, the government-owned monopoly, should ultimately be privatized, with an eye to improving postal performance.

The authors say Canada’s current postal system is anachronistic and incapable of responding to new challenges, such as the ubiquity of Internet communication, advances in retail services and logistics, and increasing competition from domestic and foreign competitors in numerous market segments.

The authors recommend a measured transition for Canada Post, with the federal government introducing competitive deregulation on a gradual basis to allow Canada Post and its workforce to make the required transition. Ottawa should also establish a regulator to oversee the system, a complaints bureau for citizens and consider subsidies, if required, to maintain universal postal service. Without reform, the postal service risks costly decline.

Many countries have undertaken postal sector reform with success, they note. In numerous European Union countries, there have been major improvements in on-time or next-day delivery and other measures of service quality. And in New Zealand, where economic liberalization has been most sweeping, the proportion of letters delivered next day increased from 88 percent in 1988 to 97 percent currently.

In the authors’ view, privatizing Canada Post would improve governance of the business, and introducing competition would provide a form of economic discipline that does not at present exist.

The cost of domestic stamps in Canada will inch up a cent tomorrow to 52 cents, nearly quadruple the price in 1976. In the past decade, stamp prices have risen seven times.

Starting tomorrow, letters headed for the United States will cost Canadians 93 cents, an increase of four cents.

Despite many beliefs, Canada Post isn’t given free rein to raise prices. By government regulation, stamp prices can only rise by no more than two-thirds of the yearly inflation rate.

The corporation, though, faces a host of technological and demographic challenges.

Individual “snail mail” use has dropped as Canadians have begun choosing e-mail over traditional penmanship and companies have begun to consolidate various services into one bill, Canada Post recently reported.

Coupled with rising inflation, skyrocketing fuel prices and a yearly population increase of about 240,000 residents, who add more than CD20 million in extra expenses, the Crown corporation says it needs to recoup the costs.

Increased terminal dues, charged to Canada Post by foreign countries receiving mail from here, have also translated to additional costs for the company, it said.

In a statement, the corporation pointed out that while Canadians will pay CD1.55 for regular mail to foreign countries besides the United States a six-cent increase the British paid CD2.28 for mail to Canada and Germans paid CD2.79.