Why the Post Office Lost $1.13 Billion

Aug. 20, 2008
The same issues causing problems for other providers are taking a toll on US Postal Service (USPS), as well

The same issues causing problems for other providers are taking a toll on US Postal Service (USPS), as well. The fiscal year-to-date decline is being blamed on the current national economic climate. “Weakness in the housing and credit markets, both of which are heavy users of mail, are leading the declines in mail volume,” claims Postmaster General John Potter. There were increases in transportation expenses, too, driven by fuel costs.

Year-to-date total mail volume through the third quarter is off 5.5%, year over year. As the USPS looks forward it notes that if trends continues this will be only the seventh year that total mail volume has decreased in the past 50 years. It would represent the largest loss for the USPS since 2002. Volumes for both First Class and Standard Mail are down 5.5%.

In the third quarter, operating revenues are down $17.9 billion, off $437 million, 2.4%, year over year. While operating expenses increased just 1.0%, up $178 million in the quarter, they were $19.0 billion despite large boosts in fuel prices.

“When the economy does rebound,” observes Potter, “mail volume may not return to previous levels. This requires that we significantly accelerate process improvements and the realignment of resources in order to achieve long-term financial success. Failure to do so will threaten our ability to meet our mission of providing universal service at affordable prices.”

On a positive note, during the quarter on-time delivery hit record highs for the categories of First Class Mail the USPS tracks. Overnight service was 97% on-time; two-day service was 95% on-time; and three day service was 94% on-time. These were gains of 1%, 2% and 3% respectively.

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