USPS Losses Grow to $2.1 Billion in Third Quarter

The U.S. Postal Service lost $2.1 billion in the third quarter of fiscal 2017, including $587 million in what the agency deems “controllable losses,” a significant increase over the previous year.

Revenue in the quarter actually stayed virtually flat in the period between April 1 and June 30 compared to the same period in fiscal 2016 -- aside from an accounting adjustment -- at $16.7 billion. The increased losses stemmed from declining mail volume being replaced with costlier shipping and package business, where revenue grew 11 percent. First-Class Mail revenue, meanwhile, fell by nearly 7 percent.

The Postal Service must gain $2 in shipping revenue to offset every $1 in lost mail revenue, a ratio the agency is not yet reaching. Controllable losses accelerated in the quarter due to higher transportation costs.

USPS does not include its mandatory payments to prefund health care expenses for future retirees as a controllable expense, which made up the bulk of its remaining losses.

Postmaster General Megan Brennan continued to beat the drum for comprehensive postal reform, pointing to an effort under way in Congress to shift postal retirees into Medicare as their primary insurer as fundamental to putting the agency on firmer financial footing. She also noted on a call with reporters Thursday that USPS’ pricing system is “fundamentally unsuited” for the current market, as it fails to account for changes in volume and cost. The Postal Regulatory Commission is currently evaluating how the Postal Service will set rates in the future; Brennan has called on the oversight body to grant her authority to set prices as she sees fit.

“Our financial situation is serious, but solvable,” Brennan said. “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."

The National Association of Letter Carriers noted that while USPS is slightly in the red this fiscal year in the controllable part of its business -- a net loss of $55 million -- it would actually would have turned an operational profit of $1.5 billion if PRC had not forced the Postal Service to roll back an emergency price hike it instituted in 2014. That marked only the second time ever, and the first time in 97 years, the agency decreased the price of a stamp.

“Addressing these external financial burdens would allow USPS, which is based in the Constitution and which enjoys broad public and political support, to continue providing Americans and their businesses with the industrial world’s most affordable delivery network,” said NALC President Fredric Rolando.