The Postal Service has ended the second quarter of its fiscal year with a substantial net loss: $1.9 billion.
Total mail volume was 38.1 billion pieces compared to 38.8 billion pieces at the same time last year. First-Class Mail volume declined 4.1 percent, however, standard Mail volume increased 0.5 percent and shipping and Package volume increased 7.3 percent.
“The Postal Service is working diligently to improve its finances by streamlining our network to improve efficiency, reduce operating costs and increase revenue, which was up $379 million over the same period last year — the third straight quarter of revenue increase,” said Postmaster General and Chief Executive Officer Patrick Donahoe.
“Despite aggressive cost-cutting actions, however, we will still incur annual inflationary cost increases of approximately $1.2 billion each year, and First-Class Mail volume continues to decline,” added Donahoe.
The Postal Service is working to increase its package delivery business by offering greater customer benefits such as improved tracking and Sunday and day-specific delivery. Shipping and Package revenue increased $252 million or 8 percent over 2013 second quarter results, fueled by the growth of ecommerce.
“Some comments in recent news reports suggest that all we need from Congress is help with restructuring our retiree health benefit plan,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “Nothing can be further from the truth. Our liabilities exceed our assets by $42 billion and we have a need for more than $10 billion to invest in new delivery vehicles, package sortation equipment, and other deferred investments.
“We haven’t been making the retiree health benefit prefunding payments because we can’t,” added Corbett. “If legislation reduced the required retiree health benefit prefunding payment, it doesn’t provide us with any more cash to pay down our debt or put much needed capital into our business. Only comprehensive postal legislation that includes a smarter delivery schedule, greater control over our personnel and benefit costs, and more flexibility in pricing and products will provide the necessary cash flows.”