USPS Releases Financial Results and Sees Loss of $1.5B in 3Q but is Hope on the Horizon with Postal Reform Act

USPS Chart revenue cost price

(Washington D.C.) In a community with a busy post office and even more online users receiving packages from various online retailers utilizing the United State Postal Service, Ventura County readers are wise to ask, “How is our postal service doing?” The Answer? According to the numbers, things could be better.

The U.S. Postal Service reported total revenue of $17.1 billion for the third quarter of 2018 (April 1, 2018 – June 30, 2018), an increase of $402 million, or 2.4 percent, compared to the same quarter last year.

  • First-Class Mail revenue declined by $134 million, or 2.2 percent
  • Marketing Mail revenue increased by $63 million, or 1.6 percent
  • Total mail volume declined by a combined 397 million pieces, or 1.2 percent, compared to the same quarter last year
  • Shipping and Packages revenue increased by $475 million, or 10.2 percent, on volume growth of 102 million pieces, or 7.5 percent
USPS logo
Courtesy of U.S. Postal Service

The net loss for the quarter totaled $1.5 billion, which is $651 million less than they lost last year. This is the result of “revised actuarial assumptions” in retirement and retiree health benefit plans. Without these, the net loss for the quarter would have increased by $507 million.

“The root cause of our financial instability is a flawed business model that is imposed by law. We encourage the Congress to engage in a broad public policy discussion and pass postal reform legislation,” said Postmaster General and CEO Megan J. Brennan. “We support legislation under consideration in the current Congress which would provide immediate flexibility to the organization, allow the Postal Service to invest in our future and continue to provide the prompt, reliable, efficient and universal service the public expects.”

New Legislation In Congress

Currently, Congress is working on the Postal Reform Act of 2018, a bi-partisan bill to help reform the long-standing financial challenges faced by the postal service since it was spun out in the 1970’s.  In part, the legislation that would allow the postal service to set their own rates rather than be required to follow simple metrics like inflation for rate increases. A similar bill was created in 2015 but failed to pass.

The Post Office Department was transformed into the United States Postal Service, an independent establishment of the executive branch of the Government of the United States. The mission of the Postal Service remained the same, as stated in Title 39 of the U.S. Code:

  • The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.

The Postal Service officially began operations on July 1, 1971, when the Postmaster General ceased to be a member of the President’s Cabinet

The Postal Service Reform Act would freeze further price increases until the Postal Regulatory Commission (PRC) established a new system for rate setting. The Commission is an independent agency that has exercised regulatory oversight over the Postal Service since its creation by the Postal Reorganization Act of 1970.

PRC has denied the Postal Service’s request to have full autonomy in establishing its prices, but proposed new caps to allow USPS to increase its prices by more than the previous inflation-based ceiling. The bill would force the commission to consider additional factors in rate setting such as financial stability, customer experience and delivery timelines.

Path Back to Financial Health

In discussion with The Voice La Voz Newspaper, the United States Postal Service believes if they can set their own rates, they can have a bright future.

In December 2017, the United States Postal Service set a record in its near 250-year history for the most packages shipped this season at 850 Million packages and 15 Billion total pieces. Revenue and volume are up and now prices need to follow according to representatives at USPS.

Relationships with online retailers, such as Amazon, are a part of the Shipping and Packaging Revenue and is an area of growth for USPS.

In addition, with the 2020 Census, the United States Postal Service and the Census engaged in a pilot to have USPS further assist the Census in what could amount to billions in dollars of savings to the Census for further support provided by USPS. The Census for 2020 is estimated to cost $12.5B. Projects of this magnitude could further benefit USPS financials.

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