USPS Loses $1.9 Billion

The U.S. Postal Service lost $1.9 billion in the quarter ending March 31.

The recession added to longer-term financial pressures to depress mail volume and revenue in the USPS’s second fiscal quarter. Despite aggressive actions to reduce costs and grow revenue, the Postal Service said it will likely face a cash shortfall of more than $1.5 billion at the end of the fiscal year.

For the tenth time in 11 consecutive quarters, the Postal Service had a net loss from operations. And the losses are getting much bigger. The loss for the six months ending March 31 is $2.3 billion, compared to a loss in the same period last year of $35 million. USPS said a significant portion of the losses can be attributed to an unprecedented decline in mail volume. In the second fiscal quarter, mail volume totaled 43.8 billion pieces, down 7.5 billion pieces, or 14.7 percent, compared to a year ago.

Operating revenue declined to $16.9 billion, down 10.5 percent or $2 billion compared with second quarter a year ago. USPS cut operating expenses to $18.8 billion, down 4 percent or $782 million from last year.

“The economic recession has been tough on the mailing industry, and we have seen an unprecedented decline in mail volumes and revenue that continued to accelerate during the second quarter,” said Postmaster General John Potter during the Board of Governors meeting May 6. “We are aggressively realigning our costs to match the lower mail volumes, while also maintaining the high level of service and reliability our customers expect. We are also taking a number of steps to grow revenue.”

The Postal Service has recently developed incentive programs to increase mail volume, including advertising mail and Priority Mail. In addition USPS has proposed a summer sale for Standard Mail, which is currently under review by the Postal Regulatory Commission.

Contact Thomas L. Gallagher at tgallagher@joc.com .