USPS losses continue, but cost-cutting leads to improvement

The US Postal Service has posted a loss of $451m for the month of January – a 23% improvement on the $592m loss in the same month last year, despite continuing mail volume declines. According to unaudited preliminary figures released by the Postal Regulatory Commission yesterday, for the first four months of its 2011 fiscal year the USPS saw a decrease in its losses from $890m to $780m, compared to the same period in the fiscal year 2010.

For the month of January 2011, mail and service revenues for the USPS fell by 2%, to $5.457bn for the month.

The First Class Mail decline wasn’t quite as steep as previous months, but the growth in Standard Mail appeared slower than in USPS results posted in the fall.

Cost-cutting measures have meant the overall performance for January 2011 was an improvement on the same month in 2010, with much of the savings achieved through a 3.6% cut in staff costs.

The Postal Service reduced its staff work hours by 3.3% for the month of January, with particular cuts in mail processing (5.7% cut in workhours), customer services (5.3% cut) and rural deliveries (4% cut) compared to the same period last year.

Volumes

Overall, the USPS stated that its volumes dropped by 1.3% compared to January 2010, to 13.7bn pieces for the month of January 2011.

Revenues for postal services dropped by 2% to $5.46bn for the month.

The Postal Service “cash cow”, First Class Mail, saw a 3.9% drop in volumes in January to just over 6.6bn pieces for the month, and a 4.1% drop in revenues compared to the same month last year, to just over $2.8bn.

This First Class Mail decline was not as bad as the 5.2% decline for the whole of the first four months of fiscal year 2011, and corresponding 5.4% in revenues for that period.

However, January’s 8% volume decline in the package segment compared to the same month in 2010 bucked the 1.4% year-on-year increase in volumes seen for the first four months of fiscal year 2011.

Standard Mail volumes rose 1.4% in January, to just under 6.4bn pieces, with revenues for the service rising 0.6% to just over $1.3bn for the month. But, this was slower growth than the 7% volume growth and 5.7% revenue growth seen for the fiscal year to date.

Cost-cutting

The USPS does not comment on its monthly figures, but its cost-cutting efforts are set to continue, with details of a redesign of its services set to be unveiled on March 25.

Postmaster General Pat Donahoe told Congress last week that after reducing costs by $9bn over the last two fiscal years, the USPS is planning to cut costs by a further $2bn in 2011.

Plans are to cut 7,500 staff in the administrative areas of the federal corporation, and reduce officer ranks by 16%.

However, today the Postal Service denied press reports from this morning that suggested it was looking to lay off 30,000 staff this year.

USPS spokeswoman Joanne Veto told Post&Parcel that there had been some confusion today concerning the potential for other jobs to be lost by attrition this year, since the average number of workers leaving or retiring from the Postal Service is around 22,000 per year.

Some of these roles, if in critical areas, will have workers replaced.

“The announcement on March 25 will show that we will cut 7,500 jobs over the course of the year,” she confirmed. “We will not be cutting 30,000.”

As it reshapes its procedures, the USPS spokesperson said that the Postal Service would be looking to invest in more technology, but that with 95% of mail processing now automated, it would not mean investment in automating further.

Facilities

The Postal Service also intends to downsize its Post Office infrastructure, including possible consolidation and closures of Post Offices, stations and branches.

It issued a clarifying report to the Postal Regulatory Commission on Monday stating that 229 Post Offices, along with 137 stations and branches, currently had their operations suspended pending possible closure.

Studies of around 1,600 other facilities are also underway concerning possible closure or consolidation.

The USPS has complained to regulators about the “strong potential for public confusion” in details of its plans for shutting facilities. But, even the Postal Service itself has had some difficulty coping with a request by the Postal Regulatory Commission to name which facilities it has actually suspended.

It is keeping the names of those facilities confidential out of fear that the public will assume the list is of facilities that are definitely closing.

Back in 2009, the Postal Service had issued a list of 3,200 facilities that were being considered for possible closure, which the public assumed to mean a list of 3,200 facilities that were being closed. The real number of closures at the end of that process was “well under 200” the USPS said.

The Postal Service is currently reviewing its procedures for closing Post Offices and other facilities. Further closures must await finalization of this work, the regulators were told.