Experts-on-everything McKinsey & Co. issued its official recommendations to the US Postal Service at a conference in Washington this week. While they are only recommendations and are non-binding (a USPS spokesperson said the consultant was instructed to “investigate all possible options”), Bloomberg News stresses in its report that not only would it be good to eliminate Saturday mail, but also 2 other days as well.
The McKinsey PowerPoint is an interesting one to go through. More ominous for our business is their suggestion on page 20 to “increase prices on select products to cover costs,” including of course, Nonprofit Mail.
Other things they point out (in addition to the well-known story of decreasing volume and increasing costs) include the USPS’s 36,500 retail locations which is more than twice as many as McDonald’s and more than three times the number of Starbucks. While this is interesting, what might be a more apt comparison would be with FedEx Office locations (about 1,600 — worldwide) or UPS Stores (about 1,300, also worldwide).
On a similar note, the report also takes a dim view on privatization as an option. Of course, no one would want to acquire a business with such a bad model, onerous legal requirements and workforce costs and obligations. However, in my opinion, the two competitors mentioned above would certainly be happy to fill the void if they were simply legally allowed to deposit their mail in anyone’s mail box, especially in bulk and business mail. But they can’t as it stands right now.
In the end, even with all of McKinsey’s price-increase and service-reduction focused suggestions, the USPS will still face a $115 billion loss. At some point after all those options are exhausted, what it comes down to is their last comment: “Legislative and regulatory changes are necessary and will require cooperation from multiple stakeholders.” Mailers will have to endure many storms over the next few years before the USPS problem is resolved (if ever).