Canada’s postal service would benefit from liberalization, privatization, new MEI publication shows

• Canada Post has accumulated $3.8 billion in losses since 2018.
• The Crown corporation is receiving a $1-billion taxpayer loan to stay afloat in 2025-2026.
• Privatization should include an employee share ownership plan.

Montreal, July 31, 2025—Privatizing Canada Post and opening up the sector to competition would result in better services and lower prices for Canadians, shows a new publication released this morning by the MEI.

“Canadians are held hostage by a postal system that is inefficient, strike-prone, and, increasingly, financially non-viable,” says Vincent Geloso, senior economist at the MEI and co-author of the report. “We should follow the lead of European countries like Germany that have liberalized and privatized their postal services, with excellent results.”

Canada Post has a federal monopoly on regular letter mail, making it the only entity legally permitted to deliver non-express letters.

The Crown corporation has run deficits for seven straight years, accumulating over $3.6 billion in losses over the past decade.

Meanwhile, letter volume in Canada has fallen from 5.5 billion letters in 2006 to 2 billion in 2024, a 64 per cent decline.

Canada Post’s market share in parcel delivery has also cratered, falling from 62 per cent in 2019 to 24 per cent in 2024, as private competitors have captured more of the growing market.

In December 2024, more than 55,000 Canada Post workers went on a 32-day strike that ground mail and parcel delivery to a halt causing a backlog of nearly 10 million packages, impacting individuals and businesses alike. The strike reportedly cost small businesses an estimated $1.6 billion.

This past May, another union issued a strike notice and began a nationwide overtime ban, again obstructing delivery volumes. Currently, Canada Post employees are voting on the corporation’s latest offer; if the vote fails, there are fears that another strike would ensue.

“There is an inherent problem with monopolies,” explains Mr. Geloso. “No competition means no incentive to be efficient or innovate, which means higher prices by way of increased costs, and consumers are left with no alternative.”

In 1989, Germany decided to open up its market to a limited amount of competition, and by 2008, the sector was fully liberalized.

Privatization of Deutsche Post started in 2000, and currently, the government holds only a small minority stake in the former monopoly.

Today, over 15,000 firms offer some sort of postal service in Germany. The country’s mail service generally outperforms those of other European countries.

In Canada, the cost of sending a letter is 50 per cent higher today than it was in 1989 (inflation-adjusted).

In Germany, postage prices have fallen by 10 per cent over the same period (after accounting for inflation).

The MEI recommends the following steps to kickstart a two-year process of privatizing Canada Post:

• Offer employees shares: This would give workers a stake in the company’s success and help prevent insiders from taking advantage during the transition (i.e., avoid asset-stripping).
• Avoid regulatory capture: A swift reform process would reduce the risk of special interest groups lobbying regulators to lock in unfair advantages in the law.

“Canada Post’s inability to adapt to the changing market shows that it won’t get better on its own; it needs a massive overhaul,” says Mr. Geloso. “Canadians are paying a lot for a second-rate service; Germany showed us how we can turn this around.”

The MEI Economic Note is available here.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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