Due to severe cuts in services and worker pay, the U.S. Postal Service achieved a net loss of $740 million in the third quarter of its fiscal year, a sharp drop compared to the $5.19 billion loss experienced in the same period last year.
In the first nine months of the fiscal year, though, USPS has seen its loss grow to $5.19 million; in 2012, that loss nine months in was up to $11.65 billion.
Operating revenue for the previous quarter stood at $16.18 billion, a 3.6 percent increase from the same period in 2012. Shipping and package service activity helped prop up the revenue, as did an increase in standard mail revenue. The rise would have been higher, but First Class activity declined. Operating expenses for the quarter finished at $16.88 billion, contributing to the majority of the loss USPS experienced in the quarter.
Even though the loss is less significant than it has been, USPS officials warn they will not be able to turn the organization around without congressional passage of the postal reform. In the organization’s five-year business plan, it calls for $20 billion in savings by eliminating post offices, cutting services and reducing worker pay and benefits. USPS also proposed reducing mail delivery to five days a week earlier, but that idea was taken off the table only to be revived last month.
The legally mandated pre-funding of retirement accounts — a $5.6 billion payment due Sept. 30 — is one of the main issues that's contributing to the postal service’s struggles, officials say. They add that current projects show the Postal Service coming up short and not being able to pay the bill, so they have been searching for a way to get around this funding cost. Any adjustment in retirement funding, as well as some of the other changes the USPS wants to make, needs to be approved by Congress in order to be implemented.
“We are encouraged that comprehensive postal reform legislation has started making its way through the legislative process in both the House and Senate,” Postmaster General Patrick Donahoe said in a statement. “We continue to evaluate the current legislation based on whether it enables $20 billion in savings by 2017.”
In October, the USPS has to send around $1.4 billon to the Department of Labor for an annual workers’ compensation payment.
It’s not all doom and gloom, however. E-commerce is fueling an increase in activity, and officials are looking for ways to use online shipping to increase revenue. - Jon Ross