USPS reports Q1 results

As reported by Post and Parcel
Thursday, February 9th, 2017
US Postal Service (USPS) has announced that – “excluding the effects of a $1.7 billion change in its workers’ compensation liability due to fluctuations in interest rates” – it posted a net loss of about $200m for the first quarter (Q1) of fiscal year 2017.

According to USPS: “Controllable income for the quarter was $522m compared to $1.3bn for the same period last year, a decrease of $735mn. Operating revenue decreased by $155m, and was significantly impacted by the April 2016 expiration of the exigent surcharge. If the exigent surcharge had remained in place, the Postal Service would have generated approximately $570m in additional revenue during the quarter.”

The Postal Service said that it processed and delivered a record volume of packages during the 2016 holiday season, and for the entire quarter, the Shipping and Packages business experienced revenue growth of $701m, or 14.7% over the same period in the prior year.

“However,” added USPS, “this positive development in the Shipping and Packages business was offset by a decline in First-Class Mail revenue of $568m, or 7.5%, due largely to the exigent surcharge expiration noted above and continuing electronic migration. Revenue from Standard Mail (renamed USPS Marketing Mail, as of January 22, 2017) decreased approximately $224m over the prior year quarter, again due mainly to the loss of the exigent surcharge. Volume increased in political and election mail, but there was a shift in the mail mix and volume declines in other Marketing Mail products.”

Commenting on the results, Postmaster General and CEO Megan J. Brennan, said: “Our current financial situation is serious, but solvable.

“With legislation that contains broadly supported provisions to improve our business model, the Postal Service can generate total savings of $26 billion over the next five years.  When combined with a favorable outcome of the recently initiated 10-year pricing system review by the Postal Regulatory Commission and continued aggressive management actions, the Postal Service would return to financial stability.”

Chief Financial Officer and Executive Vice President Joseph Corbett, added: “Despite the loss of revenue from the expiration of the exigent surcharge and continued effects of electronic migration on First-Class Mail revenue, we continue to believe there is strength in the postal system, and that there is a path forward for us to return to financial health.

“However, the Postal Service’s return to long-term financial stability is only possible when our continuing actions to improve efficiency, reduce costs and expand our use of technology are combined with our proposed legislative and regulatory reforms that together will enable us to continue to meet our universal service obligations and invest in the future of the Postal Service and the mailing industry as a whole.”

As previously reported, a new bill focused on transforming the structure of USPS  – called the Postal Service Reform Act of 2017 – is currently working its way through the US Congress. The bill has been criticised in some quarters, but it was favourably received by USPS itself.

On 2 February, Postmaster General Brennan issued a statement saying: “I thank Chairman Jason Chaffetz, Ranking Member Elijah Cummings as well as other members of the House Oversight and Government Reform Committee including Representatives Mark Meadows, Gerry Connolly, Stephen Lynch, and Dennis Ross, for introducing a bipartisan postal reform bill that is fiscally responsible and that if passed would enable the Postal Service to invest in the future and to continue to provide affordable, reliable, and secure delivery service to every business and home in America.

“Enactment of the bill, favorable resolution of the Postal Regulatory Commission’s pricing system review, and continued aggressive management actions will return the Postal Service to financial stability.”

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Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email