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Monday, November 18, 2013

USPS News : Postal Service Reports Improved $5 Billion Loss

WASHINGTON — The Postal Service on Friday reported a $5 billion net loss for the fiscal year that ended Sept. 30, a significant improvement over last year, when the agency reported a record $15.9 billion loss.

The agency’s financial reports show that mail volume and revenue are continuing to decline as Americans increasingly turn to electronic forms of communication, but online shopping deliveries are offsetting some losses.
Total mail volume was 158.4 billion pieces, down from 159.9 billion pieces the year before. Operating revenue was $66 billion, up from $65.2 billion over the same period. Over all, operating expenses were $72.1 billion, down from $81 billion last year.
“It’s the first growth in revenue since 2008,” said Joseph Corbett, chief financial officer at the Postal Service, who said that despite the growth in revenue, this was the seventh consecutive year that the post office had had a net loss. Mr. Corbett said the mounting loss pointed to the need for Congress to pass legislation to overhaul the Postal Service.
First-class mail, its main source of revenue, keeps declining. Total volume dropped to 65 billion pieces for the fiscal year from 68 billion pieces the previous year. Revenue fell 2.4 percent, to $28.1 billion from $28.8 billion, a slower decline than the previous year’s 5 percent drop.
Shipping and packaging, however, grew 8 percent during that time, to 3.7 billion pieces, and revenue increased to $12.6 billion from $11.5 billion over the same period. This week the post office struck a deal with to deliver its packages on Sundays, which postal officials hope will led to even greater growth in revenue for its shipping business.
Postal workers’ unions said Friday’s results represented a big improvement. “This outstanding performance — with earned revenue exceeding operating costs by $600 million — reflects the stabilization of mail revenue over the past year and the 8 percent jump in package revenue as online shopping grows,” said Fredric Rolando, president of the National Association of Letter Carriers. “If allowed to innovate and grow, the Postal Service is poised for a fantastic comeback.”
The Postal Service attributes its improved finances to several factors: an improving economy, a reduction in staffing, the consolidation of hundreds of mail-processing plants and a reduction in the office hours of thousands of small, rural post offices.
It attributed the net loss mostly to a 2006 law that requires it to pay $5.5 billion annually into a health fund for its future retirees.
As a result of its financial troubles, the agency has defaulted on three annual payments into the fund. It has also exhausted its $15 billion borrowing limit from the Treasury Department. More recently the agency has asked for permission to raise its postage pricesto help cover costs.
The Postal Service said its losses were expected to continue until legislative changes ae made to help it return to financial stability. For over three years, the agency has been urging Congress to allow it to make several changes. These include getting a refund of $11 billion that was overpaid into one of its pension funds, ending Saturday mail delivery and stopping the prepayments for future retiree health benefits and replacing them with its own health insurance program. It would also like to enter into new lines of business, like delivering beer and wine by mail, which are now prohibited.
Legislation that several members of Congress say would help the agency shore up its finances is pending, but unlikely to pass this year. Postal unions oppose the bills because they would allow the agency to go to a five-day mail delivery schedule.
“Based on briefings the committee has received from U.S.P.S., this is likely the last year that ongoing cost-cutting measures will generate significant savings,” Representatives Darrell Issa, Republican of California and chairman of the House Oversight and Government Reform Committee, and Blake Farenthold, Republican of Texas, who heads the postal subcommittee, said in a joint statement. “Therefore, without legislative reform that includes modified Saturday delivery, U.S.P.S. expenses will begin to increase once again.”

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