The Postal Service has now recorded its 12th straight year of net losses with the announcement of its FY 2018 financial results.
It reported a net loss for the year of $3.9 billion, $1.2 billion more than its loss in the previous year. It also lost money in each quarter in FY 2018.
First-Class Mail volumes declined by approximately 2.1 billion pieces (3.6%). On the plus side, the package shipping business has continued to grow, increasing by 394 million pieces (6.8%) in 2018. Although mail volume declines were partially offset by growth in package volume, overall volume for the year declined by 3.2 billion pieces.
Expenses for workers compensation and retiree health benefits increased by $801 million and $221 million, respectively, largely attributable to changes in actuarially determined expenses which the Postal Service says are outside of its control. These increases were partially offset by a $260 million reduction in expenses for the amortization of unfunded retirement benefits.
The Postal Service also paid down some debt in the fourth quarter, reducing debt by $1.8 billion and finishing the year with $13.2 billion in total debt.
The Postal Service is expecting a very busy Christmas shipping season which stands to help give it a financial boost, at least in the short term. The week of December 17-23 is expected to be the busiest week for shipping and mailing of the Christmas season.
Consequences of the Continued Red Ink
The mounting financial losses are starting to weigh on the Postal Service and draw warnings from government watchdogs. The Government Accountability Office recently said in a report that the Postal Service will have to make some tough financial decisions in the near future because of the state of its finances. And yet another GAO report said that health benefits of Postal retirees are currently on an “unsustainable path, warning that the Retiree Health Benefits fund will be depleted by 2030 if no other payments are made into the fund.
The Trump Administration has warned of the possibility of needing a bailout to shore up the Postal Service if it doesn’t reverse course and even set up a task force earlier this year to try to come up with ideas to put the agency on more solid financial ground.
Bills were introduced in both the House and Senate in the current Congress to make reforms to the Postal Service in an attempt to improve its finances, but neither has advanced and both are unlikely to after the recent elections.