The US Postal Service (USPS) has reported revenue of US$16.7bn for the third quarter of fiscal year 2017 (April 1-June 30). Revenue for the quarter was essentially unchanged compared to the same quarter last year, excluding the effect of a US$1.1bn non-cash change in accounting estimate recognized during the third quarter of fiscal year 2016.
Revenue from first class mail and marketing mail decreased by US$422m and US$150m respectively, compared with the same quarter the year before, due largely to lower volumes. These declines in revenue were nearly offset by continued growth in the lower-margin shipping and packages business, with third quarter revenue increasing US$473m, or 11.3%.
Operating expenses for the quarter were US$18.8bn, a decrease of US$461m, or 2.4%, compared with the year before. Expenses for retiree health benefits and workers’ compensation declined by US$869m and US$1bn respectively, but were partially offset by US$1.2bn in higher retirement expenses largely driven by changes in Office of Personnel Management actuarial assumptions and interest rates.
USPS reported a net loss for the quarter of US$2.1bn, an increase in net loss of US$573m compared with the same quarter last year. Controllable loss for the quarter was US$587m, an increase in controllable loss of US$35m, driven by higher transportation costs.
Megan J Brennan, postmaster general and CEO, USPS, said, “The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines. Our financial situation is serious, but solvable.
“The continuation of aggressive management actions, and legislative and regulatory reform, will return us to financial stability and enable the Postal Service to maintain the long-term affordability of mail, invest in America’s mailing and shipping industry, and best serve the American public.”
In the third quarter, letter mail volumes declined by approximately 1.4 billion pieces, or approximately 4%, while package volumes grew by 133 million pieces, or approximately 11%, continuing a multi-year trend of declining letter mail volumes and increasing package volume. Year-to-date, despite growth in package volume, overall volume has declined by more than three billion pieces.
Joseph Corbett, chief financial officer and executive vice president, USPS, said, “The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives. To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload.”
August 16, 2017