Postmaster General and CEO Patrick Donahoe

Postmaster General and CEO Patrick Donahoe Jose Luis Magana/AP

Postal Service Rebounds in Fiscal 2013, Still Loses $5 Billion

USPS saw continued growth in packages, but requires congressional action to get back in the black.

The U.S. Postal Service lost $5 billion in fiscal 2013, marking the seventh consecutive year of losses but a significant improvement over fiscal 2012, the agency announced Friday.

Citing a growing package business due largely to e-commerce, as well as adaptive business practices, USPS improved upon its record near-$16 billion loss the previous year. The Postal Service bested its fiscal 2012 performance in all four quarters of this year. As it has done for years, the USPS Board of Governors pinned its negative cash flow on congressional hindrance, including its requirement to prefund retirees’ health benefits.

Postmaster General Patrick Donahoe once again called on Congress to pass a bill that would eliminate the requirement, shift retirees’ health costs to Medicare and give the agency more flexibility to make business decisions such as altering pricing and introducing new products. Donahoe said he expects a “sizable uptick” in package delivery during the upcoming holiday season, and in that spirit provided a special message to Congress.

“We have not been naughty, we have been nice,” Donahoe said at a Board of Governors meeting Friday. We don’t deserve another lump of coal…we want comprehensive reform in our stocking this year.”

Donahoe added the Postal Service has “achieved some excellent results for the year in terms of innovations, revenue gains and cost reductions, but without major legislative changes we cannot overcome the limitations of our inflexible business model.”

Prospects for such an agreement hit a major setback recently after an apparent breakthrough over the summer. Homeland Security and Governmental Affairs Committee Chairman Sen. Tom Carper, D-Del., and ranking member Sen. Tom Coburn, R-Okla., came together to introduce a bill in August. A markup of that bill was delayed after Democratic committee members were hesitant to get on board. Carper has rescheduled the markup, however, for Nov. 20.

Absent congressional action, the Postal Service will seek to raise its prices higher than the rate of inflation. The Postal Regulatory Commission will rule on the legality of this move by Jan. 26. USPS officials have fully endorsed the Carper-Coburn legislation and would walk away from the exigent rate increase if Congress passes the bill into law.

In addition to an 8 percent growth in package revenue, USPS saw a 3 percent increase in standard mail revenue. First-class mail -- historically the Postal Service’s most profitable offering -- continued its decline, as did periodicals. Overall, the Postal Service took in $66 billion in revenue, $1 billion more than its revenue projections.

The Postal Service saved about $1 billion through a further reduction in its workforce. It shed 37,400 jobs in the fiscal year and cut 12 million work hours. USPS has trimmed its workforce by about 200,000 over the past several years and expects to cut an additional 100,000 by 2017.