The US Postal Service reported an almost $2.5bn (€2.27bn) net loss in the three months to 31st March. This was on revenues that dropped 2.4% y-o-y to $19.3bn (€17.55bn) in the period.
A mixture of factors hit the postal service including non-controllable costs for management to include retiree health benefits. In addition, it had to pay into the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), both of which contributed to the losses.
One issue of concern to the US Postal Service has been a decline in volumes in both mail and parcels in the quarter. Where First Class Mail joined a global trend in falling volumes of 8% y-o-y, perhaps more worrying was the drop in its parcel volumes of 5% in the period – a segment where it might be more competitive. Commenting on this matter, Chief Financial Officer Joseph Corbett said, “We continue to be challenged by declining mail volumes and rising operating costs due to inflation. We are managing the costs within our control, such as reducing work hours by 7m hours compared to the same quarter last year.”
Price increases have been instituted to offset the drop in mail volumes. Corbett continued, “However, price increases are necessary to try to offset declining mail volumes and inflation. Despite these increases, our prices remain among the most affordable in the world.”
Speaking of the trajectory of the USPS as a whole, in light of the Delivering for America strategic plan, Postmaster General Louis DeJoy said, “We continue to focus on achieving break-even financial results for the 10-year period, although inflationary and economic conditions, as well as administrative hurdles, have proven difficult. The increase in the pace of change now required to achieve our financial goals will continue to be balanced with providing service performance throughout the nation.”
Author: Richard Shrubb
Source: USPS
