Reforms by international mail carriers could help Canada Post navigate challenges

When Ottawa announced a series of reforms to Canada Post in late September, reaction to the move highlighted a simmering dissatisfaction when it comes to the mail and parcel carrier.

The changes, ranging from the demise of door-to-door service to a slowdown of some deliveries, are expected to save the Crown corporation millions of dollars annually.

Unionized workers, who began a weeks-long national strike that has since transitioned to rotating stoppages, said it represented an “attack” on their jobs. Some Canadians expressed frustration over eventual reduced service, while others complained their tax dollars shouldn’t help an outdated operation stay afloat at all.

The events raise questions over the future of the century-and-a-half-old institution and what form it will need to take in an era where digitization and private competitors threaten its survival.

Some experts say the mail carrier could look to the experiences of its international peers such as the United States Postal Service or the U.K.’s Royal Mail, among others.

The U.S. counterpart is the best comparator to Canada Post, given the challenges it faces and what solutions it has explored, said Ian Lee, an associate professor at Carleton University’s Sprott School of Business, who last year authored a paper titled, “Canada Post: The Tipping Point Has Arrived.”

Lee said the digitization of information — from the rise of social media to the expansion of electronic bills and payment mechanisms — has plagued mail carriers worldwide.

The geography problem

In Canada and some other countries, digitization combines with a more defined problem affecting the classic mail delivery business model than in places with denser populations such as Europe.

“What’s different about Canada, the U.S. and Australia is large geographies and relatively small populations per square mile, per square kilometre, which makes the task much more difficult and much more expensive,” Lee said.

“They’re going through practically identical problems. They’re hemorrhaging cash, their mail volumes are collapsing. The people in the rural are saying, ‘Don’t close my post office’ and the people in the urban say, ‘I couldn’t care less what happens to the post office.'”

Lee said the USPS has looked to mitigate its challenges by forming partnerships with private couriers, while leveraging its competitive advantage over the so-called “last mile.”

Those agreements see private firms handle the logistics — pre-sorting and bringing mail to local postal zones — while the USPS focuses its transport resources on delivering letters to peoples’ front doors or community mailboxes.

“(They’re saying), ‘We won’t be in the sorting business anymore.’ This is where they’re evolving,” said Lee.

“If (Canada Post) can pivot … there is a market there for them to become the partner of the companies like Amazon, if they can get their act together.”

A service role

In a move that would save nearly $400 million annually, the federal government announced last month an end to a moratorium on community mailbox conversions, authorizing Canada Post to convert the remaining four million addresses that still receive door-to-door delivery.

It is also ending a three-decade moratorium on closing rural post offices in an effort to reduce duplication in overserved areas. Meanwhile, non-urgent mail will be cleared to move by ground instead of air, reflecting a decline in delivery volumes, saving Canada Post more than $20 million annually.

Ottawa said the corporation is losing about $10 million per day, despite providing a $1-billion injection earlier this year to keep it operational. Since 2018, Canada Post has accumulated more than $5 billion in losses including more than $1 billion last year alone.

But Canada Post’s business model is meant to support communities across the country — especially those in remote locations who are hardest for private firms to reach — rather than chase profits, said Ann Armstrong, a professor at the University of Toronto’s Institute for Management and Innovation.

“There is something sacrosanct about a postal service,” she said.

“It seems to me the model is perfectly viable and needs to be preserved, if perhaps costs and so on need to be adjusted.”

Armstrong said there’s room for Canada Post to become more innovative by introducing new services. For instance, she highlighted the expansion of the Japanese postal carrier into banking services.

The Universal Postal Union, a UN agency, said a poll of its membership found 84 per cent of countries offer some type of financial service through their mail carrier.

Earlier this year, Canada Post launched a spending and savings account called the Canada Post MyMoney Account in partnership with Canadian fintech Koho Financial Inc.

The account has features such as cash back and options to earn interest and build or improve credit.

The union representing Canada Post workers has called for a more expansive postal banking system, noting Canada had one from around confederation until it closed in 1969.

It has said modern postal banking systems around the world feature a broader range of services such as online banking and banking machines, credit and debit cards, money transfers, insurance, loans and mortgages and investment products.

Privatization

There’s also the case study of Royal Mail, the five-century-old British postal service that was privatized in 2013.

Its financial success since then has varied, as has its ownership, having been taken over earlier this year by Czech billionaire Daniel Kretinsky. The company turned a profit of 12 million pounds, or nearly C$22.7 million in its 2024-25 fiscal year, following losses of roughly C$657 million in 2023-24 and C$791 million the year prior, according to financial reports.

But its privatization has afforded it freedom to reform operations and compete with other couriers, while still maintaining door-to-door delivery, said Michael Anderson, who previously spent 25 years with Royal Mail, including in roles managing parcel operations and dealing with distribution partners.

He said Royal Mail is still “performing a universal service obligation” under the regulation of the U.K.’s communications watchdog Ofcom.

Yet it’s managed to build “a set of solutions that e-commerce firms want to buy,” said Anderson, now a parcel and mail industry consultant who specializes in helping carriers become more efficient through technology.

He said Royal Mail has significantly scaled up its capabilities to fast-track deliveries — within one business day for first-class mail or two-to-three days for second-class service. The company has also bolstered communication around tracking and estimated delivery times, while providing customers alternatives if they want to redirect deliveries somewhere other than home.

“If you’re a retailer that’s got a product to get to your consumers, you’re looking at Royal Mail and thinking, ‘OK, well that service will do that.’ And so they’re getting huge volumes,” said Anderson.

Competitive advantage

Royal Mail is still working through some hiccups. Ofcom announced this week it fined Royal Mail for having only delivered 77 per cent of first-class mail and 92.5 per cent of second-class mail on time in 2024-25, short of its 93 per cent and 98.5 per cent targets, respectively.

Brits have nonetheless come to rely on the postal service in its latest iteration, said Anderson, noting the rate of postal volume decline in the U.K. “is one of the lower numbers compared to other markets.”

“Royal Mail is in an incredibly large market, but it’s also a competitive market, which means you’ve got to invest … and that’s forced Royal Mail to up their game. It’s like, a rising tide lifts all boats,” he said.

“They wouldn’t have been able to do that consistently over a decade if they’d had government-only funding.”

However, Anderson acknowledged Canada’s far lower-density geography as a key difference separating the two markets.

That obstacle is why Lee said he doubts Canada Post can replicate the transformation of its European peers like Royal Mail amid other mounting challenges. Instead, he said its future is likely in parcel delivery only, as Canadians grow less dependent on physical mail.

“The post office will have a market with parcels if they can ever get their act together but they’re facing some very nimble competitors (which are) much more efficient and much more dynamic,” he said.

But Armstrong said it would betray Canada Post’s raison d’être to strip it down in the hopes of turning a profit.

“As a public service, that’s its paramount objective,” she said.

“If it makes some money, awesome. But to me it’s really about creating community and reinforcing community.”

This report by The Canadian Press was first published Oct. 19, 2025.