U.S. Postal Service logs $2 billion loss, despite price hikes
The U.S. Postal Service ended yet another quarter in the red, posting a $2 billion loss for its third quarter ending June 30.
The agency previously posted a loss of $740 million during the same period last year and reported a $1.9 billion loss in the immediately preceding quarter this year.
The foundering organization said its results mark the 21st time out of the past 23 quarters that it has reported a loss. The USPS has been ailing since Congress issued a mandate in 2006 forcing it to make regular pre-funding payments into a health benefits fund for its future retirees. Over the past 23 quarters, the Post Office did not report during the two quarters in which Congress granted the organization a reprieve and agreed to reschedule its mandatory payments.
The USPS has defaulted on three previous payments to its retirees’ health benefits fund and CFO Joseph Corbett said on Monday that the agency will not be able to cover the $5.7 billion tab it is required to pay into the fund by the end of September.
On Monday, the USPS noted that its losses were propelled by increased operating expenses of $18.4 billion, up 8.9% and $1.5 billion year-over-year, that were driven by workers compensation payments.
The latest round of losses piled up despite the fact that the agency experienced an uptick in shipping and packaging revenue, which increased by 6.6%, to $3.2 billion, during the quarter. Standard mail revenue also jumped by 5.1% to $4.2 billion. The volume of First-Class mail sent was down 1.4% during the quarter, but USPS said that dip was offset by a price hike that went into effect at the beginning of the year, resulting in a revenue increase of 3.2%, to $7.1 billion.
Corbett also said the USPS will need to reinvest in its infrastructure in order stem losses. “To continue to provide world-class service and remain competitive, we must invest up to $10 billion to replace our aging vehicle fleet, purchase additional package sorting equipment, and make necessary upgrades to our infrastructure,” he said in a statement.