This week, the U.S. Postal Service announced that its net loss for this fiscal year (ending Sept. 30) came in at $6.5 billion. It said the deficit was related to the impact of inflation on operating expenses.
Although the Consumer Price Index stayed level last month, according to the most recent report from the Bureau of Labor Statistics, it has been trending up for more than a year. In September, it increased by 0.4%.
Last year, the U.S. Postal Service reported net income of 56 million, it attributes that income to the “one-time non-cash impact of the Postal Service Reform Act (PSRA),” which passed last April. When Audacy reported on the legislation after it was passed by the House of representatives last year, it was estimated that the bill would allow the Postal Service to save nearly $50 billion over the next decade.
The Postal Service has been a permanent fixture of the federal government since the passing of the Post Office Act of 1792.
“The Postal Service’s status is unique. It is an independent agency of the executive branch, yet it is required to operate like a business,” explained the USPS website. “It generally does not receive tax revenues to support its operations and must compete for customers. The success of the Postal Service depends on a culture of operational precision, world-class performance, outstanding service and innovation.”
Despite the sizeable net loss this year, USPS said there has been “significant progress” under the Delivering for America plan in regards to improved service reliability, reduced transportation expenses and work hours. Still, it said that there’s a continued need for administrative action to help keep the service stable.
“Although we are just in the early stages of one of the nation’s largest organizational transformations – which is improving our processing, transportation, and delivery operations – we are already providing more consistent, reliable, and timely delivery to America's businesses and residences,” said Postmaster General Louis DeJoy. “We are also addressing near-term financial headwinds relative to inflation as we make strong progress in our long-term cost control and revenue generating strategies, including launching new products like USPS Ground Advantage. The whole organization is highly focused on implementation of the Delivering for America plan and creating a more effective, efficient and competitive Postal Service to serve the nation far into the future.”
Ground Advantage is a program released this summer that provides a more affordable way to send packages.
Due to mail revenue declines, there was a $321 million decrease in operating revenue this year compared to 2022, bringing total operating revenue to $78.2 billion. Revenue for the Shipping and Packages category increased, as did First-Class Mail revenue, while Marketing Mail revenue decreased.
“These decreases were driven by commercial mailers’ increasing use of digital and mobile advertising, an overall decline in advertising spending due to economic pressures, and a higher inflationary environment affecting print media production costs,” said the Postal Service.
Under these financial conditions, the Postal Service was unable to make the full payments of $3 billion and $2.1 billion towards its Civil Service Retirement System and Federal Employees Retirement System obligations, respectively. These payments were not made in an effort to maintain liquidity and keep services running, said the Postal Service.
“As previously mentioned in the third quarter release, continued rising costs in several areas of our business pose a challenge,” said Chief Financial Officer Joseph Corbett. “We, however, remain steadfast in our commitment to grow package revenue and manage the costs within our control, such as by reducing work hours by 28 million hours and by taking calculated steps to decrease transportation costs consistent with the tenet of our Delivering for America plan to optimize our networks.”