The Royal Mail, Britain’s national postal service, was recently privatized. The government argued that its IPO was necessary to modernize the service, a company which has seen profits cut drastically, as lettermail volumes continue to fall, and competitive private couriers pick up the new parcel business spawned by the growth of ecommerce, leaving the public system with little room to manoeuvre.

In Canada, Canada Post, a crown corporation, posts regular losses while continuing to provide service to all Canadian addresses. However, an IPO for Canada Post, which is currently burdened by expansive service obligations, but possesses great physical assets and a wide delivery network, could be framed very attractively for investors. Proceeds from a sale could be invested in improvements in service speed and reliability to better compete with UPS and FedEx.

However, would privatization serve the interests of Canada’s overall economy? Canada Post, mandated to serve all of Canada, subsidizes the cost of doing business with remote communities by delivering to those areas at unprofitable rates, while daily bill and cheque delivery will continue to be fundamental to many businesses for the near future. Pulling out such services, in the name of profitability, with no immediate replacement, could drastically impact rural life and fundamentally damage many business models. This critical role of the postal service must be considered before attempting to see mail as a responsibility of the free market. Could regulations protect essential mail service while still making Canada Post an attractive investment?

http://www.cbc.ca/news/world/u-k-royal-mail-service-to-be-privatized-in-coming-weeks-1.1704324