The U.S. Postal Service on Tuesday said that it posted a net loss for its third quarter of $1.7 billion, compared to earning net income of $59.7 billion for the same quarter last year.
Those results reflect USPS’ performance for the period from April 1 to June 30, and also included a droop in operating revenue, which was $18.6 billion for the quarter, marking a decrease of $168 million, or 0.9%, compared to the same quarter last year.
By mail type, First-Class Mail revenue increased $221 million, or 4.0%, on a volume decline of 678 million pieces, or 5.9%, compared to the same quarter last year. Shipping and Packages revenue remained relatively flat while volume declined 41 million pieces, or 2.4%, compared to the same quarter last year. Marketing Mail revenue decreased $333 million, or 8.8%, on a volume decline of 2.6 billion pieces, or 16.0%, compared to the same quarter last year.
The Marketing Mail decreases were driven by the continued decline in advertising spending due to economic pressures experienced throughout most of the fiscal year, a higher inflationary environment affecting print media production costs, and lower political and election mail revenue and volume, compared to the same quarter last year, due to the timing of elections.
In comparison, total operating expenses were $20.5 billion for the quarter, an increase of $1.8 billion, or 9.6%, compared to the same quarter last year. "Continued rising costs in several areas of our business pose a challenge," USPS Chief Financial Officer Joseph Corbett said in a release. "We continue to manage the costs within our control, such as by reducing work hours by 6 million hours compared to the same quarter last year and by focusing on transportation and other operating costs."
Postal Service leaders said the results showed three trends, claiming that: they are making “significant progress” under the Delivering for America (DFA) 10-year overhaul plan producing improved service reliability, that the new USPS Ground Advantage model advances USPS’ position in the package delivery business, and inflationary pressures are easing but continue to negatively impact financial results.
In separate remarks made yesterday, Postmaster General Louis DeJoy said the service would react by making deeper cuts in its operating budget in order meet payments due for employee benefit plans under the Civil Service Retirement System (CSRS).
“As for our financials, we have made significant efforts to reduce our cost of performance with substantial reductions in workhours and transportation costs and year over year stability in our package revenue. However, these efforts have been overcome by a universal curtailment of advertising expenditures, significant inflation costs and the continued existence of an improper CSRS allocation, which we assumed would have been eliminated at this time in our original DFA projections,” DeJoy told the Postal Service Board of Governors.
“We are working diligently across the organization to address these unforeseen conditions and will make the required adjustments necessary to bring our financial trajectory closer to our original goals. This will require the projected lower inflation rates to be experienced, continued but more aggressive cost reductions to our operations, increased market dominant and package revenue, exceptional management execution, the usual great support from our employees and ……cooperation from our stakeholders,” DeJoy said.
However, some of those stakeholders said that USPS’ losses for the quarter showed that the service should roll back its July 9 postage stamp price increases, which raised the cost of each Forever stamp from 63 cents to 66 cents, among other changes.
The advocacy group Keep US Posted—which represents consumers, nonprofits, newspapers, greeting card publishers, magazines, catalogs, and small businesses—warned that recent unprecedented postage increases are not only draining American wallets, but that they are not benefitting The U.S. Postal Service.
“Despite record postage rate increases, the U.S. Postal Service is still losing billions more than expected,” Keep US Posted Executive Director and former Congressman Kevin Yoder (R-Kans.), said in a release. “With three unprecedented postage hikes in 12 months, USPS has kicked off runaway 'stampflation, yet as we see from today’s financial results, these stamp hikes are a drain on the entire postal network, not just on consumers. When the USPS received more than $120 billion in relief from Congress just last year, the American public cannot, and should not, continue to shoulder Postmaster General DeJoy’s hike-and-spend model, especially when his strategy is threatening to run the Postal Service into the ground.”
