Thousands of early retirements help USPS cut losses in first quarter
The US Postal Service made a $354m net loss in the year’s peak season, according to its latest financial figures. The performance was an improvement on last year’s $1.3bn first quarter loss, but represented the 19th loss-making quarter in the last 21 quarters at USPS.
Revenue in the quarter grew by 1.9% to $18bn, while operating expenses were cut by 3% to $18.3bn.
Growth came in the run-up to Christmas in the package business thanks to the rise of e-commerce, with shipping and package revenue up $479m or 14.1% year-on-year. But, the Postal Service’s most profitable service, First Class Mail, saw revenues fall by $209m compared to the same quarter last year.
Expenses were partly cut thanks to 22,800 employees taking voluntary early retirement last year.
Overall mail volume fell by 3.4% in the three months up to the end of December, compared to the same quarter last year, with the agency’s key money maker, First Class Mail, seeing volumes down 4.6% year-on-year.
Standard Mail, which is largely comprised of advertising mail, saw volumes down 2.8% in the quarter.
The festive season helped package and express volumes grow by 10.3% year-on-year, fueled by promotional campaigns and introduction of Sunday deliveries in certain metropolitan areas.
Cost-cutting
The Postal Service said improvements made in its operating costs came following last year’s decision to accelerate its network downsizing — a decision taken because of the repeated failure of Congress to enact postal reform.
USPS sealed new agreements with the unions allowing use of more non-career part-timers, to help with flexibility of staffing levels and cutting labour costs.
Chief Financial Officer and Executive Vice President Joseph Corbett said: “We grew revenue by over $300 million through aggressive marketing and improving service, and we reduced operating costs by $574 million in Quarter 1, partially due to the separation of approximately 22,800 employees in 2013 under a Voluntary Early Retirement program and improved efficiency in our workforce.”
Patrick Donahoe, the USPS chief executive, said he was “proud” of the achievements his team had made cutting operating expenses while growing the package business.
But he said USPS was in need of comprehensive legislative reform from Congress.
“We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation. We appreciate the efforts of the House and Senate oversight committees to make this happen as soon as possible,” he said.
USPS said that once again at the end of this fiscal year it intends to default on another massive payment to the federal government if no reforms are passed on Capitol Hill. This year’s default would be $5.7bn required by law to pre-fund future USPS liabilities for its retiree healthcare system, a payment system it is hoping Congress will revise, though it has repeatedly failed to do so since 2009.
