USPS Loses Staggering $15.9B for Fiscal Year
The Postal Service continues to grow its package services business. Revenue from that business increased by $926 million, or 8.7 percent, on a volume increase of 244 million pieces compared to the same period last year. Higher consumer spending, higher e-commerce retail sales plus increased marketing efforts drove much of the growth in this segment of the Postal Service business during the last year.
The encouraging growth trend in the package business is not, by itself, enough to offset the declines in First-Class Mail and Standard Mail, the USPS said. First-Class Mail revenue, which peaked in 2007, dropped $1.163 billion, or 3.9 percent, this fiscal year, while Standard Mail decreased $747 million, or 4.3 percent, compared to last year. However, the rate of decline in the First-Class category did slow in 2012.
Other details of the yearly results compared to the same period last year include:
• Total mail volume of 159.9 billion pieces compared to 168.3 billion pieces a year ago;
• Operating revenue of $65.2 billion compared to $65.7 billion in 2011;
• Operating expenses of $81.0 billion (including the $11.1 billion expense associated with prefunding retiree health benefits) compared to $70.6 billion the year before.
The $15.9 billion loss was driven by $13.4 billion in expenses that were outside the control of the Postal Service in the short-term. These expenses include the $11.1 billion retiree health benefits prefunding expenses and the expenses related to the long-term portion of workers’ compensation. When these expenses are deducted the net loss would have been $2.5 billion. The Postal Service has been successful in reducing controllable expenses as mail volume and revenues have declined.
This year’s improvement is largely attributable to the reduction in work hours, which decreased by 27 million, or 2.3 percent, in 2012 vs. the previous year. Total work hours continue to decrease despite increases in the number of delivery points, which rose by approximately 1.3 million over the last two years.