USPS: continued rising costs in several areas of our business pose a challenge
The U.S. Postal Service today announced its financial results for the 2023 fiscal year ended September 30. The net loss totalled $6.5 billion, compared to net income of $56.0 billion for the prior year. The net income last year was due primarily to the one-time non-cash impact of the Postal Service Reform Act (PSRA) in April 2022 and the results this year were significantly affected by the impact of inflation on operating expenses.
Results under GAAP include retiree benefits expense for the amortization of underfunded Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) plans, and workers’ compensation expenses caused by actuarial revaluation and discount rate changes, as well as the impact of the PSRA for the same period last year. The Postal Service reports its adjusted results excluding these costs.
“Although we are just in the early stages of one of the nation’s largest organizational transformations—which is improving our processing, transportation, and delivery operations—we are already providing more consistent, reliable, and timely delivery to America’s businesses and residences,” said Postmaster General Louis DeJoy. “We are also addressing near-term financial headwinds relative to inflation as we make strong progress in our long-term cost control and revenue generating strategies, including launching new products like USPS Ground Advantage. The whole organization is highly focused on implementation of the Delivering for America plan and creating a more effective, efficient and competitive Postal Service to serve the nation far into the future.”
Total operating revenue was $78.2 billion for the year, a decrease of $321 million, or 0.4 percent, compared to the same period last year, as package revenue increases were offset by mail revenue declines.
Revenue for the overall Shipping and Packages category increased $324 million, or 1.0 percent, on a volume decline of 175 million pieces, or 2.4 percent, compared to the same period last year. In July 2023, the Postal Service successfully launched USPS Ground Advantage, a new shipping offering which provides a simple, reliable, and more affordable way to ship packages. First-Class Mail revenue increased $515 million, or 2.1 percent, on a volume decline of 3.0 billion pieces, or 6.1 percent, compared to the prior year.
Marketing Mail revenue decreased $920 million, or 5.8 percent, on a volume decline of 7.7 billion pieces, or 11.4 percent, compared to the same period last year. These decreases were driven by commercial mailers’ increasing use of digital and mobile advertising, an overall decline in advertising spending due to economic pressures, and a higher inflationary environment affecting print media production costs.
Total operating expenses were $85.4 billion for the year, an increase of $5.8 billion, or 7.3 percent, compared to the same period last year. On a non-GAAP basis, adjusted operating expenses increased by $2.1 billion, or 2.6 percent, compared to the same period last year. On a non-GAAP basis, controllable loss was $2.3 billion, compared to controllable loss of $473 million for the prior year.
“As previously mentioned in the third quarter release, continued rising costs in several areas of our business pose a challenge.” said Chief Financial Officer Joseph Corbett. “We, however, remain steadfast in our commitment to grow package revenue and manage the costs within our control, such as by reducing work hours by 28 million hours and by taking calculated steps to decrease transportation costs consistent with the tenet of our Delivering for America plan to optimize our networks.”
To preserve liquidity and ensure the Postal Service’s ability to fulfil its primary mission is not placed at undue risk, the Postal Service has not made certain annual amortization payments to the Office of Personnel Management (OPM) for CSRS and FERS. During 2023, the Postal Service was unable to make the full payments of $3.0 billion and $2.1 billion towards its CSRS and FERS obligations, respectively. Additionally, administrative reform related to how OPM apportions the cost of the CSRS benefits is still necessary to restore the Postal Service to financial health.
Roman Martinez IV Re-Elected Chairman of the Postal Service Board of Governors
During today’s meeting of the U.S. Postal Service Board of Governors, Roman Martinez IV was re-elected by his fellow Governors to continue to serve as chairman of the Board of Governors. The Governors also elected Amber F. McReynolds to serve as vice chairman.
Martinez has served on the Board of Governors since August 2019, following his confirmation by the U.S. Senate to serve the remainder of a seven-year term that expires Dec. 8, 2024. On Jan. 12, 2022, Martinez was elected to serve as the 25th chairman of the Board. On Nov. 10, 2022, he was reelected by his fellow Governors to continue serving as chairman of the Board of Governors. Previously, Martinez was elected to serve as vice chairman of the Board on Feb. 9, 2021. He has chaired the Board’s Audit and Finance Committee since Oct. 3, 2019, and has served on the Election Mail Committee since Feb. 1, 2022.
McReynolds has served on the Board of Governors since May 2021, following her confirmation by the U.S. Senate to serve the remainder of a seven-year term that expires on Dec. 8, 2026. She currently serves on the Board’s Election Mail Committee and is a member of the Operations Committee.
