Nati Harnik / AP file photo

Featured eBooks
Life After Government
Securing the Government Cloud
The Cybersecurity Challenge
USPS Revenue Continued to Slide During the Holiday Season

Postal Service keeps slashing work hours to reduce costs as controllable losses grow.

The U.S. Postal Service’s earnings during the busy holiday season fell once again in fiscal 2020, though the overall loss for the quarter was cut in half from the previous year to $748 million. 

The “controllable” loss for USPS—which the agency calculates by excluding factors outside of management’s control, such as inflationary adjustments to liabilities—more than tripled from fiscal 2019, however, spiking to $387 million during the Oct. 1, 2019-Dec. 31, 2019, period. Just four years ago, USPS turned a controllable profit of $1.1 billion during the first quarter, its busiest time of the year. 

The Postal Service brought in $19.3 billion in total revenue for the first quarter this fiscal year, a 2% decline from the same quarter last fiscal year. The mailing agency was able to cut its costs $1.1 billion during the three-month period, primarily by slashing personnel costs through reductions in work hours. 

"We continuously focus on reducing work hours and related expenses wherever possible," USPS Chief Financial Officer Joe Corbett told reporters on Thursday. A recent report by the Government Accountability Office found the Postal Service slashed personnel costs by $8 billion in recent years, but the agency had exaggerated additional savings.

In another bit of negative news for the Postal Service, package and shipping volume dropped off by 86 million pieces, or nearly 5%, compared to the same time last year, as competitors and retailers ramped up their own networks to make deliveries. The growth of that line of business over the last several years has proven a valuable lifeline for USPS as regular mail volumes continue to drop off precipitously. The agency still saw package revenue increase by $146 million in the quarter due to pricing increases. 

Marketing mail revenue also fell by 5% over the same quarter last fiscal year, which Corbett said was due to an uptick in the category in the run-up to the 2018 midterm elections.  

Postmaster General Megan Brennan called on Congress to enact legislative relief to enable the agency to find new ways to grow revenue and cut statutorily mandated benefits for employees. The Postal Service’s compensation costs are growing faster than inflation, she said. She noted legislation the House passed this week to end the requirement that USPS prefund health benefits for future retirees was a positive step, but would do little to alleviate its immediate cash flow problems

‘We continue to face systemic profitability challenges due to our restrictive business model and mandated costs," Brennan said. "We will continue to aggressively pursue opportunities to generate profitable revenues and drive greater operational efficiencies under our current structure, while also seeking legislative and regulatory reforms to allow the Postal Service to better invest in our business, compete for customers, control our costs and serve the evolving needs of the public."