NALC: New Lazard white paper provides reality check on USPS finances and postal reform

September 13, 2012 — Rather than attempting to shrink to survive, a successful restructuring of the U.S. Postal Service requires a business strategy that leverages the Postal Service’s unrivaled delivery network, says international financial advisory firm, Lazard, in a new white paper prepared for the National Association of Letter Carriers.

The review, based on the Postal Service’s third quarter and 10-month financial results, shows that, although the Postal Service faces significant challenges, it is stronger financially than is often portrayed. Lazard notes in particular that operating revenue was stable and operating losses were smaller than forecast for the third quarter, and highlights dramatic record growth in shipping services. The white paper also emphasizes the negative impact that congressionally mandated pre-funding has had on the Postal Service’s finances.

Rather than focus on cutting services, Lazard says a better strategy for restructuring the Postal Service requires “an ambitious rethinking of its business model,” which should:

  • Better leverage last-mile delivery to grow the parcel service business;
  • Explore expansion of services that the Postal Service can provide; and
  • Consider modifications and greater flexibility to pricing of products.

The white paper released today is the second review prepared by Lazard for NALC this year. In April, the advisory firm completed a due diligence investigation of the Postal Service, which was conducted by a Lazard team with extensive experience in restructuring strategy.

To read Lazard’s newest white paper, click here.