The US Postal Service reported revenue of $16.7bn for the third quarter of fiscal year 2017 (April 1, 2017 – June 30, 2017). Revenue for the quarter was essentially unchanged compared to the same quarter last year, excluding the effect of a $1.1bn non-cash change in accounting estimate recognized during the third quarter of fiscal year 2016.
Revenue from First-Class Mail and Marketing Mail decreased 6.5% and 3.69% to $6,057m and $3,919m, respectively, over the prior year quarter. These declines were chiefly precipitated by volume declines of 4.8% and 3.5% in each of these businesses. These declines in revenue for these products were nearly offset by continued growth in the lower-margin Shipping and Packages business, which saw third quarter revenue increase by 11.3% to $4,656m.
Operating expenses for the quarter were $18.8bn, a decrease of 2.4%, compared to the prior year quarter. Expenses for retiree health benefits and workers compensation declined by $869m and $1.0bn, respectively, but were partially offset by $1.2bn in higher retirement expenses largely driven by changes in Office of Personnel Management actuarial assumptions and interest rates.
In total, the USPS reported an operating loss for the quarter of $2.1bn, from a comparable loss of $1.5bn in Q3 2016.
“The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines,” said Postmaster General and CEO Megan J. Brennan. “Our financial situation is serious, but solvable. The continuation of aggressive management actions, and legislative and regulatory reform, will return us to financial stability and enable the Postal Service to maintain the long-term affordability of mail, invest in America’s mailing and shipping industry, and best serve the American public.”
In the third quarter, letter mail volumes declined by approximately 1.4bn pieces, or approximately 4%, while package volumes grew by 133m pieces, or approximately 11%, continuing a multi-year trend of declining letter mail volumes and increasing package volume. Year-to-date, despite growth in package volume, overall volume has declined by more than 3bn pieces.
“The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives,” said Chief Financial Officer and Executive Vice President, Joseph Corbett. “To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload.”
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