On November 7, Canada Post submitted a proposal to the federal government outlining its proposal to restructure the postal service—a proposal which the federal government had mandated they produce in September. While there are few details on the ‘comprehensive transformation plan’ that Canada Post delivered, for such a plan to be truly transformative, it must include more than just cuts. If Doug Ettinger, president and CEO of Canada Post is sincere in his desire to “modernize” the postal service, Canada Post must follow the example of the most successful postal providers around the world and invest in diversifying its services.
Very few people would disagree that Canada Post needs to transform the way it operates. A business model originally built on a delivery monopoly for (now-fast-declining volumes of) letter mail simply cannot provide the revenues it once did, that much is clear. And while parcel delivery is a growing market that has buoyed some of the lost revenues from lettermail, Canada Post management seems reluctant to deviate from its core business.
But addressing declining revenue solely through rampant cost-cutting is only going to leave our national postal service more impoverished—virtually every other national postal service in the industrialized world has long recognized this. Declining letter mail has been a reality for decades. While Canada Post’s management dithered, forward-thinking post offices around the world recognized that the most strategic and sustainable way to address these shortfalls was to diversify the services they offered in order to secure new streams of revenue.
Indeed, the world’s highest revenue-generating postal services earn the bulk of their revenues from services other than lettermail and parcel delivery. For example, Post Italiane, Italy’s postal service only earns 13 per cent of its overall revenue via mail and parcel delivery, with the vast majority of its revenues generated via financial services, mobile phone plans and insurance. In comparison, Canada Post’s revenue sources remain overwhelmingly uniform, almost entirely dependent on mail or parcel delivery.
High-revenue generating post offices are often the most diversified in terms of service offerings. Examples include Germany’s DHL Group (logistics & freight), Japan Post (banking & real estate) and Swiss Post (logistics & finance). Importantly, these postal providers are not resting on their laurels, continuing to innovate and diversify their services, for instance Austria’s post office will roll-out mobile phone plan offerings next year.
The Universal Postal Union (UPU—the United Nations agency that coordinates global postal policies) State of the Postal Sector 2025 report is unequivocal on the necessity of diversification for financial success. “The most important finding is clear: postal operators that reduced their reliance on traditional letter mail performed significantly better.”
Importantly, revenue diversification matters more than the specific substitute activity. Whether financial services, logistics, insurance, mobile phones, real estate or identity services, what counts is reducing dependence on lettermail revenue.
Equally important, and of particular concern for Canada Post, is that financially successful postal providers maintained their physical office network. Network consolidation—a euphamism for closing post offices—significantly hurt postal performance, according to the report. “Closing or consolidating offices pulls postal-revenue growth below GDP growth, whereas maintaining a dense bricks-and mortar presence helps the sector keep pace.” The UPU warns that while strategies reliant on aggressive post office consolidation may deliver short-run savings, they will inevitably push revenues down further.
The UPU findings that successful postal operators must diversify their services and maintain a dense brick-and-mortar network of offices obviously stands in complete contrast to the vision of Canada Post shared by its management and the current government. Efforts to diversify Canada Post’s service offerings are regularly dismissed, while our vast network of post offices that ties urban, rural and remote communities together is viewed more as a costly liability than a vital national infrastructure that a multi-service postal provider could build upon. Rather than emulate the best practices of the world’s most successful postal operators, Canada Post believes it can cut its way to financial sustainability.
A truly transformative vision for Canada Post would prioritize investment over retrenchment. This could be done without public subsidy by allowing the crown corporation to issue long-term debt to raise the funds required to diversify services.
Canada Post’s management is not averse to investments it deems important. If the costs of past mailbox conversions hold, Canada Post is prepared to spend over $1 billion to convert four million addresses from home delivery to community mailboxes—effectively an investment in diminishing service quality. Perhaps a better investment would be to secure the much-needed alternative sources of revenue required so Canada Post can continue to provide high-quality service to Canadians well into the future.
Most of the industrialized world’s postal operators have undertaken some plan of transformation in order to respond to the changing realities of the digital economy. Those that have fared best have diversified their service offerings while maintaining a physical presence that can respond to local demand. But the window for these kinds of transformations is closing.
While late to the game, at least Canada Post has the advantage of learning from the successes of other national postal providers that have gone before it. A truly transformative plan would prioritize the investments needed to expand Canada Post’s repertoire of services. However, if its transformation plan is one solely fixated on cuts and closures, it may squander one of its last chances to transform itself into a service provider that has the capacity to meet Canadians present and future needs.
