US Postal Service revenue dips with economy’s downturn

The U.S. Postal Service is delivering its best service ever, but the slowing economy kept the agency short of its expected revenue by almost a half-billion dollars last quarter.
A new pricing structure was expected to boost revenues, but the nation’s slowing economy has meant less mail. The Postal Service’s first-quarter volume dropped by 1.7 billion pieces, almost 3 percent, from the same period in 2007. The first quarter runs from October through December. The decrease affected virtually all categories of mail. The steepest decline was in Express Mail, which lost nearly 11 percent of its volume.

Periodicals were the only category to post an increase, a modest 1.2 percent.
“We’ve had some leakage in revenue due to the fee increases,” Glen Walker, chief financial officer for the Postal Service, said at the Jan. 30 meeting of the postal Board of Governors. “And when you look at the national economy, it’s not doing well, and businesses aren’t mailing as much.”

Despite the drop, the Postal Service managed to post USD 689 million in increased revenue over the first quarter of 2007, mostly attributable to the increased fees. But that figure was USD 500 million short of expectations: The higher prices couldn’t fully offset lost revenue.

Performance reviews, on the other hand, were overwhelmingly positive. The first quarter is typically the most difficult, because of holiday shipping and unpredictable weather. But national service was at all-time highs, with 96 percent of overnight mail and 93 percent of two-day mail reaching its destination on time. And a national poll found 92 percent of residential customers were pleased with the Postal Service.

The numbers were especially good for Chicago, which last year ranked as the worst mail market in the nation. Ninety-four percent of Chicago’s overnight mail and 92 percent of its two-day mail arrived on time in the first quarter, increases of 5 and 11 percent over 2007.