The U.S. Postal Service reported a $2.1 billion net loss in the most recent quarter, a $573 million increase in losses from a year earlier, driven by less mail being delivered as electronic means replace the traditional stamp and envelope.
“The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines,” said Postmaster General Megan 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.”
Created by the federal government, the Postal Service is a quasi-private entity. It remains under congressional authority but is required to operate as an independent business. Contrary to widespread belief, it does not receive any federal funding and must rely on the sale of postage and related products for its operation. Declining mail volume has hit the service hard. It reported a $5.6 billion net loss in fiscal 2016, a $5.1 billion net loss in 2015, a $5.5 billion one in 2014 and a $5 billion net loss in 2013.
The amount of letters being mailed dropped by 4 percent, or about 1.4 billion in the third quarter of fiscal 2017. That was somewhat compensated by increases in package delivery, which grew about 133 million pieces, or 11 percent, thanks to online shopping. Nevertheless, overall mail volume declined by three billion pieces in the last year. The trend is expected to accelerate, noted USPS Chief Financial Officer 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,” he said.
Postal unions noted that lower stamp prices affected the results after the expiration of a 2-cent surcharge Congress imposed in 2014 and said the price should be higher. “These figures reflect the impact of last year’s rollback in stamp prices. Without the 2-cent reduction in stamp prices, this quarter’s revenue would be $500 million higher and the year-to-date revenue would be $1.5 billion higher,” said Fredric Rolando, president of the National Association of Letter Carriers. “The April 2016 rollback in stamp prices was the first since 1919, and it makes little financial sense because the Postal Service already has the industrial world’s lowest rates.”
