Fraser Forum

Amazon trumps government in delivering goods to the North

Printer-friendly version

A private company seems to be doing a much better job than government at getting critical groceries to residents of a remote northern community.

CBC News has been reporting how most residents of Iqaluit, Nunavut with a credit card have Amazon Prime memberships and are able to order groceries and other essential goods cheaper than what those items cost on their shelves, despite government subsidy programs.

The price of basic goods in northern communities is astronomical especially for perishable goods such as milk. One Globe and Mail piece in 2014 included a graphic explaining the differences, pointing out that many residents were paying $600 a week in grocery bills.

One CBC story mentioned a box of 180 Pampers costs about $70 off the shelf in Iqaluit; on Amazon, similar size boxes are around $35. With an annual membership fee, Amazon Prime members can get free and much faster shipping. Delivery times are still in weeks, not days, but for most northern residents the savings are worth it.

One local school principal told CBC News: "Amazon Prime has done more toward elevating the standard of living of my family than any territorial or federal program. Full stop. Period.”

According to Canada Post, the Iqaluit post office is one of the busiest in the country with most activity coming from packages through Amazon Prime. In the first five months of 2017, the post office delivered 88,500 parcels.

Residents of Iqaluit are terrified that Amazon may drop their community from a shipping location as it did in 2015 with many remote Nunavut communities.

One resident, David Marineau-Plante, said it best in a CBC news story: "It would be very, very bad, I don't want to say pandemonium, but maybe something akin to that.”

However things evolve, Amazon Prime has shown how there are private solutions that may work for the North’s food price problem. Food subsidy programs are not enough, and are very expensive options. Also, the government must choose what to subsidize versus not to subsidize and gets into serious debates over that. Perhaps the federal and the territorial governments can work with Amazon or other delivery companies to help get critical supplies to remote locations.

The cost of transportation is a major factor in the pricing of basic grocery items in the North.

Communities lacking permanent all-season roads must rely on seasonal delivery by sea or air. Barry Prentice, an entrepreneur and president of Buoyant Aircraft Systems International, said in a media interview that improving technology can help. Airships (what we know as “blimps” and rigid airships such as Zeppelins) are a lower-cost solution to transport cargo to these remote communities. Prentice argued that airships—even if costly to set up the infrastructure—are still cheaper than the cost of replacing ice roads with gravel roads.

In the end, we should expand our horizons on finding a solution and not be afraid to embrace potential private remedies to the problem.


Blog Category: 

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.