Postal service posts $5.1 billion loss

Nov. 16, 2011
The U.S. Postal Service (USPS) recorded a net loss of $5.1 billion for its fiscal 2011 year, which follows an $8.5 billion net loss for its fiscal 2010 year – red ink largely the result of Congressionally-mandated payments to pre-fund retiree benefits.

The U.S. Postal Service (USPS) recorded a net loss of $5.1 billion for its fiscal 2011 year, which follows an $8.5 billion net loss for its fiscal 2010 year – red ink largely the result of Congressionally-mandated payments to pre-fund retiree benefits.

In fact, USPS noted 2011 losses would have topped $10.6 billion had it not been for passage of legislation that postponed a congressionally mandated payment of $5.5 billion to pre-fund retiree health benefits.

However, that retiree health benefit pre-funding payment is now due by Nov. 18 and unless additional legislation is enacted, the Postal Service will be forced to default on this payment, noted Patrick Donahoe, postmaster general & CEO, in a statement.

USPS added that operating revenue dropped to $65.7 billion in fiscal 2011 compared to $67.1 billion in fiscal 2010, alongside a drop in operating expenses to $70.6 billion compared to $75.4 in fiscal 2010.

That drop in expenses is due in part to a reduction in work hours by 34 million despite an increase of 636,500 delivery points, noted USPS, which pointed out that since 2001, it’s reduced work hours by 28%, while delivering to almost 14 million additional addresses.

Donahoe also pointed out that first-class mail volume – the USPS’s largest and most profitable part of its operation, representing 49% of its overall revenue – continues to decline, significantly reducing the agency’s revenues despite increased demands for its other shipment services.

Total 2011 mail volume declined by 3 billion pieces, or 1.7%, with first-class mail continuing its year-over-year decline from $34.2 billion in 2010 to $32.2 billion in 2011 (a 5.8% drop).

“The continuing and inevitable electronic migration of first-class mail underscores the need to streamline our infrastructure and make changes to our business model,” said Joe Corbett, USPS CFO, in a statement. “Since peaking at 213 billion pieces in 2006, our volume has continued to decline each year.”

By contrast, USPS shipping services revenue, which includes priority mail and express mail, increased $530 million in 2011 or by some 6.3%. Revenues from standard mail service increased by $495 million or 2.9% as volumes increased by 2 billion pieces (a 2.6% gain).

“The Postal Service can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” Donahoe noted.

“To return to profitability we must reduce our annual costs by $20 billion by the end of 2015,” he said. “We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there.”

Sponsored Recommendations

Tackling the Tech Shortage: Lessons in Recruiting Talent and Reducing Turnover

Discover innovative strategies for recruiting and retaining tech talent in the trucking industry at our April 16th webinar, where experts will share insights on competitive pay...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

How Electric Vehicles Help You Prolong the Life of Your Fleet

Before adopting electric vehicles for commercial/government fleets, prioritize cost inquiries. Maintenance is essential; understand the upkeep of EV fleets. Here’s what you need...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!