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Saturday, June 15, 2024

Postal Service adds $740 million for $3.9 billion yearly loss

Not good times for the post office (AP)
Not good times for the post office (AP)

The Postal Service has trimmed its losses to $740 million over the last three months by consolidating processing facilities, cutting hours for workers and post offices and reducing workers’ compensation costs, the agency said Friday.

Still, year-to-date, the Postal Service had losses totaling $3.9 billion, and the agency said that without help from Congress its financial woes will worsen.

The report for the financial quarter ending June 30 comes as Congress considers proposals to fix the agency’s finances. The agency lost $16 billion last year and is trying to restructure its retail, delivery and mail-processing operations.

Over the first nine months of its fiscal year, the Postal Service said 104 mail processing facilities were consolidated, career employee work hours were reduced by about 41 million and operating hours at 7,397 post offices were reduced.

The service wants to end most Saturday and door-to-door mail delivery. It also is seeking to reduce its congressionally mandated $5.6 billion annual payment for future retiree health benefits. The agency says ending Saturday mail delivery would save $2 billion each year.

Joe Corbett, the agency’s chief financial officer, said in a statement that “without comprehensive postal reform legislation signed into law, our hands are tied and we expect multibillion dollar annual losses to continue.”

The third-quarter loss was far less than its $5.2 billion loss for the same period last year. Postal officials said its cost-cutting and efficiency moves helped lower losses, along with a $918 million decrease to its workers’ compensation expenses due to interest rates.

Shipping and package revenue continued to be a bright spot for the agency, increasing 8.8 percent compared to the same period last year. That helped operating revenue rise 3.6 percent to $16.2 billion in the third quarter, compared to last year’s third quarter.

First-class mail revenue, the Postal Service’s most profitable category, declined by 0.9 percent compared to the same period last year. Total mail volume was 37.9 billion pieces, down from 38.3 billion pieces for the third quarter last year.

The Postal Service for years has been wrestling with declining mail volume and a 2006 congressional requirement that it make advance payments to cover expected health care costs for future retirees, something no federal agency does. The agency expects to miss a $5.6 billion health care payment next month at the end of its fiscal year. It defaulted on two similar payments last year.

The pre-funding requirement for future retiree health benefits accounts for the brunt of the agency’s red ink and underscores the urgency for Congress to end the mandate, postal officials say. About $11.1 billion of last year’s $16 billion agency losses were due to the annual health care payments.

Earlier this year, the agency backpedaled on its plan to end Saturday mail delivery after running into opposition in Congress.

The National Association of Letter Carriers says ending Saturday delivery would hurt small businesses along with rural residents and the elderly, who depend more heavily on the mail for prescription drugs and other goods.

Postal officials also want permission to ship beer, wine and spirits to compete with private shippers such as FedEx, saying it could bring in as much as $50 million a year. The service also favors gradually ending most door-to-door deliveries in favor of curbside and cluster box service to save money.

Congress is beginning to tackle plans to help the Postal Service.

A Senate bipartisan proposal would let the agency end Saturday delivery in a year and make changes in how pensions and retiree health care costs are calculated in an attempt to stabilize the agency’s finances.

It also would impose a two-year moratorium on closing mail processing plants. The agency also would be allowed to ship alcohol. Hearings on the bill are expected after Congress returns from its summer break next month.

The House Oversight and Government Reform Committee recently approved a bill to end Saturday delivery and to change how pension and retiree health costs are calculated to curb the agency’s losses. The GOP measure did not win any Democratic votes. The bill also directs the agency to gradually shift from door-to-door delivery to cluster box and curbside delivery as a cost-cutting move over the next decade, something which many House Democrats oppose.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

Copyright  © 2013 The Associated Press. All rights reserved.

Copyright  © 2013 Capitol Hill Blue

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3 thoughts on “Postal Service adds $740 million for $3.9 billion yearly loss”

  1. Last week, my mail was delivered at 8:15PM. The postman said he had had nearly 200 additional stops added to his route because of not replacing personnel who retired. But he didn’t mind because he got time and a half after 5PM and double time after 7PM. No wonder USPS can’t dig itself out of a financial hole! Personally, I think stopping Saturday mail delivery at residences makes sense. BTW my mail is consistently being delivered between 6:30 and 7:15 PM.

  2. “and the agency said that without help from Congress its financial woes will worsen.”

    Indeed, Ms. Rainier.

    It is the ‘help’ from Congress that got them into this state.

    Do the math: 3.9 billion loss with 5.6 billion in mandated payments. They’d have been profitable without that meddling. While there are some right and reasonable mandated payments, note that even the year before they’d have been profitable without them.

    If I were cynical I might suggest that it was a deliberate effort to wreck postal employee unions as one of the last bastions of unions in the Federal Government.

    Note that the entire ‘Department of Homeland Security’ was, in essence, a giant union-busting exercise. If your department was folded into the ‘National Security Apparatus’ then you had a choice – lose the union or lose your job.

    Okay – I am cynical. That’s what certain people are trying to do, and they have the votes to do so, whatever happens to postal mail – To those in Congress, what happens to the little people is entirely irrelevant to their agenda.

    The USPS might still lose money – But it’s an essential service. Nobody expects the FBI to make money (although drug seizures might help). Nobody expects the NSA to pay for itself. Nobody expects the Spani… Oh, never mind.

    The mail is a public service. That it happens to be an income-generating one is incidental.

    Congress must allocate funds to the USPS for every expense they force the USPS to incur. If there be a profit some years, so be it. Save it until there’s a loss.


  3. The MSM media seems to be remiss by NOT including how much of these losses is directly attributable is directly connected to the onerous burden Congress has placed on the USPS to pre-fund pension benefits 75 years into the future. No other corporation or government agency/quasi agency has to do this. This is a very cynical ploy to bust the USPS and its labor unions.

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