The Postal Service reported a $748 million net loss in the first quarter of fiscal year 2020 on total revenue of $19.4 billion in its latest earnings report.
The $748 million loss was actually a significant improvement over the same time period last year in which the Postal Service lost $1.5 billion.
The “controllable loss” for Q1 was worse than a year ago at $387 million versus $103 million in Q1 2019. This figure represents expenses management considers to be under its control.
The slowing demand for transaction mail continued to weigh on the agency’s finances. First-Class Mail revenue declined by $168 million, or 2.5 percent, on a volume decline of 571 million pieces, or 3.8%, and Periodicals revenue declined by $24 million, or 7.7 percent, compared to the same quarter last year. Marketing Mail revenue declined by $254 million, or 5.4 percent, on a volume decline of 1.7 billion pieces, or 7.9 percent, compared to the same quarter last year. The Postal Service said that the majority of volume declines in Marketing Mail were due to high levels of political and election mail in October and November of 2018, that were not replicated during the same period in 2019.
On the upside, demand for shipping/packages continued to grow. Shipping and Packages revenue increased by $146 million, or 2.3 percent, despite a volume decline of 84 million pieces, or 4.6 percent, compared to the same quarter last year.
One thing that helped the Postal Service’s numbers was reducing employee compensation expenses. Chief Financial Officer and Executive Vice President Joseph Corbett noted this, saying, “The Postal Service reduced work hours by 6.4 million relative to the same quarter last year, helping us to reduce overall compensation expenses.”
Labor costs are the largest component of the Postal Service’s costs, comprising 76% of the agency’s total costs according to the Postal Service Office of Inspector General.
The Postal Service is going on 13 years of financial losses and has defaulted on required payments to the Postal Service Retiree Health Benefits Fund for the last 10 years and is expected to continue to do so for the next decade.
