Losses continue at USPS
The U.S. Postal Service has reported a net loss of $8.8 billion for fiscal year 2019 (October 1, 2018 – September 30, 2019) an increase in net loss of $4.9 billion since 2018.
Approximately $3.4 billion of this increase in net loss was the non-cash impact of discount rate changes on actuarial calculations affecting workers’ compensation expense.
USPS also reported operating revenue of $71.1 billion, an increase of $514 million compared to the prior year.
The higher revenues were driven largely by price increases and continued growth in the Shipping and Packages business, where revenue increased $1.3 billion, or 6.1%, which more than offset revenue declines in First-Class and Marketing Mail as a result of declining volumes in that segment of its business.
The total volume of mail and packages delivered during the year declined by 3.8 billion pieces or 2.6%, driven largely by First-Class Mail declines of 1.8 billion pieces, or 3.1 %, and Marketing Mail declines of 1.6 billion pieces, or 2.1 %. Package volume grew slightly at 16 million pieces, or 0.3 %, continuing a multi-year trend of declining mail volumes and increasing package volumes, although package volume growth slowed considerably during the year.
“We continue to adjust to declining mail volume and remain focused on leveraging our unique and unrivalled network to gain new customers and grow profitable revenue in the increasingly competitive package business,” said Postmaster General and CEO Megan J. Brennan.
“However, revenue growth in our package business will never be enough to offset imbalances in the Postal Service’s business model, which must be addressed through legislative and regulatory reforms in order to secure a sustainable future,” Brennan emphasized.
Operating expenses for the year were $79.9 billion, an increase of $5.4 billion, or 7.3%, compared to the prior year. This was driven by an increase in workers compensation expense of $3.5 billion, of which $3.4 billion was directly the result of changes in discount rates outside of management’s control.
Compensation and benefits expenses increased by $994 million due to contractual wage increases, and retirement benefits expenses increased by $320 million due largely to the higher amortization costs of unfunded benefits. Transportation expenses increased by $323 million as the Postal Service continued to experience increases in fuel prices and highway contract rates.
As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. This reduction allows the Postal Service to continue to reduce interest costs.
Controllable loss for the year was $3.4 billion, an increase of $1.5 billion compared to the prior year. The net loss for the year was $8.8 billion, an increase in net loss of $4.9 billion compared to 2018.
“We continued to make progress in the fiscal year in containing expenses that are under management’s control,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “However, actions within the control of the Postal Service are not enough to return the Postal Service to financial health.”