Postal Service posts $1.9 billion loss despite efficiency efforts

May 10, 2014 in News by The Manimal

Source: Washington Post

Increased revenue and savings from efficiency efforts weren’t enough to prevent the U.S. Postal Service from losing $1.9 billion in its fiscal second quarter, postal officials said Friday.

The earnings report, which follows a $1.3 billion first-quarter loss, spurred officials to again call on Congress to enact Postal Service-proposed changes to help stabilize the agency. Officials have urged changes to employee health insurance, retirement and mail-delivery schedules.

The Postal Service’s second-quarter revenue from package delivery rose by $267 million, or 9.3 percent, compared with the prior year, while revenue from advertising mail was up $96 million, or 2.4 percent. However, revenue from first-class mail, the Postal Service’s most profitable category, decreased $198 million, or 2.7 percent. Total mail volume fell to 38.8 billion pieces from 39.4 billion pieces.

The second-quarter loss was less than the $3.2 billion decline for the same period last year, and officials credited their cost-cutting steps. The agency is seeing results from closing processing facilities, reducing retail operating hours and downsizing its workforce through retirement incentives, officials said. The number of career employees decreased by about 25,000 in the second quarter and by 46,000 in the past year, bringing the number to just below 500,000, the smallest since 1966.

“Everything that we can do, we have and will continue to do. . . . We need action on the legislation,” Postmaster General Patrick R. Donahoe said in a conference call with reporters. He pointed to a requirement that the agency pre-fund health insurance costs for its retirees, calling its removal the “single biggest change that would have the least negative impact.”

Key House and Senate committees have held hearings in recent months on the Postal Service’s financial situation, with leaders expressing hope for enacting legislation this year.

The Postal Service has pushed for ending Saturday mail delivery except for packages. But the issue has met resistance in Congress. Last year, the Senate approved legislation that would have delayed five-day mail delivery for two years while trying other cost-saving tactics. A House bill that would have ended Saturday delivery outright never reached a floor vote.

The Postal Service announced this year that it would go ahead with its five-day delivery plan without congressional approval but backtracked last month after its governing board said that language in a budget law requires six-day delivery.

Other postal proposals involve greater flexibility in pricing, creating its own health insurance program and giving newly hired employees a defined-contribution retirement plan only.

The National Association of Letter Carriers on Friday noted that Postal Service operating revenue was $121 million higher than the same period a year ago, while expenses were down by $1.2 billion.

Association President Fredric Rolando said the Postal Service report “shows the USPS moving sharply towards breaking even” compared with previous years.

Rolando said the relative improvement in Postal Service finances negates the necessity of ending six-day delivery.

“Instead of the postmaster general’s ‘shrink to survive’ strategy — which will only begin a death spiral for the USPS — what is needed is a dynamic business plan for the future to take advantage of the many opportunities for growth, including the exploding package-delivery market,” he said.

Sen. Thomas R. Carper (D-Del.), who chairs the Senate committee that oversees the Postal Service, issued a statement Friday calling for comprehensive postal reform and saying that the declining losses are nothing to celebrate.

“The reality is that any decline of revenue at this rate is unsustainable and threatens the Postal Service’s long-term viability,” he said.

Sen. Tom Coburn (Okla.), the committee’s ranking Republican, said the Postal Service should act independently of Congress to reduce its losses.

“While reform is necessary, the Postal Service should not wait on a parochial-minded Congress and must immediately take steps within its control to secure additional revenue and achieve cost savings, including potential action to secure additional revenue through price increases,” Coburn said. “I will continue to support giving the Postal Service the independence it needs to ensure its long-term viability.”