The U.S. Postal Service announced Friday that it lost $5.1 billion in the last fiscal year, the latest financial blow to hit the government-chartered mail delivery service.
It was the ninth consecutive year that the Postal Service posted a loss. Officials said the loss was caused by intense competition, lack of flexibility in the products and services it can offer, and the high cost of its health and retirement benefits for employees.
Related Story: http://www.washingtonexaminer.com/article/2575923
“The shipping and package delivery business, as we all know, is extremely competitive. Competition among large delivery companies gets more fierce every day. But not only that … People that used to be our customers are taking steps to become delivery companies. Regional delivery companies are springing up and start-ups are springing up, too, with companies like Uber,” Postal Service Chief Financial Officer Joseph Corbett told post office’s Board of Governors Friday morning.
Postmaster General and CEO Megan J. Brennan said the service would purse more cost-cutting and seek more efficiencies but that her hands were tied in terms making the changes necessary to turn a profit.
“Controllable income will be hard to sustain in the coming years absent substantive changes to our business model and, as you know, this requires legislative change,” Brennan told reporters.
Created by the federal government, the Postal Service remains under its authority but operates as an independent business. It does not receive federal funding and must rely on the sale of postage and related products for its operation. It reported losing $5 billion in fiscal 2013 and $5.5 billion in 2014 as well.
Friday’s reported losses could have been worse. The Postal Regulatory Commission allowed a temporary “exigent surcharge” — a price increase on its products — last year that brought in $3.5 billion in extra revenue. The surcharge is set to be rolled back in April.
On the one hand people are still using mail, with shipping and package volume up by 14.1 percent from the previous year, the Postal Service reported. But traditional mail, long its main source of revenue, continues to drop off as people switch to email and social media. First-class mail and standard mail volume fell by 2.2 percent and 0.3 percent, respectively. The increase in package volume could not make up for it.
Even with the competition, USPS had revenue $68.9 billion, up 1.6 percent from the previous fiscal year. But the service had operating expenses of $73.8 billion, an increase of 0.9 percent. Most of that was due to the service’s attempt to pay down its retiree benefit obligations.
USPS retiree healthcare, pensions and workers’ compensation are unfunded by about $86.6 billion. Congress mandated in 2006 that the Postal Service pay down those future obligations to ensure that taxpayers do no get stuck with the bill, and USPS has been devoting about $5.6 billion in revenue annually toward that goal.
Postal Service officials and the unions that represent its workers have long complained about the mandate, arguing that the service shouldn’t have to ensure the pension and retirement funds are fully paid-up. They called again Friday for legislation to change it.
