The Postal Service has reported a $540 million net loss on $19.2 billion in total revenue for the first quarter of fiscal year 2018 (October 1, 2017 – December 31, 2017). The losses come despite the busy Christmas shipping season in which the Postal Service set a record on December 18th when it delivered more than 37 million packages, the most in a single day in its 240 year history.
The Postal Service reported a $200 million net loss last year for the same time period.
Package volumes grew by 111 million pieces, but mail volumes declined by approximately 2.0 billion pieces, continuing a multi-year trend of increasing package volume and declining letter volumes.
Revenue from First-Class Mail and Marketing Mail decreased $309 million and $248 million, respectively, due largely to lower volumes. However, revenue from the Shipping and Packages business increased by $505 million.
Operating expenses for the quarter were $19.7 billion, an increase of $2.0 billion (11.0%) compared to the same period last year. This was largely driven by an increase in workers’ compensation expense of $1.4 billion, resulting from changes in interest rates. Other contributing factors were increases in unfunded retirement benefit costs and retiree health benefits expense of $293 million and $210 million, respectively, driven by changes in actuarial assumptions.
The Postal Service continues to blame some of its financial problems on a lack of action from Congress and underscored the need for reform legislation in its press release about its latest financial results.
Legislation was introduced in the current Congress to make pension funding reforms and allow for postal rate increases, among other changes. It is unknown at this point if it will advance further.
Other legislation has been introduced to expand the shipping options afforded to the Postal Service. Last fall for example, Congresswoman Jackie Speier (D-CA) introduced a bill to allow the Postal Service to ship alcoholic beverages so it could better compete with UPS and FedEx in this space.
“Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution,” said Postmaster General and CEO Megan J. Brennan. “We will continue to do everything within our control to improve operating efficiencies, manage expenses, expand our use of technology and keep mail affordable, but these actions must be combined with regulatory and legislative changes.”