Postal losses shrink to $354M

The U.S. Postal Service racked up another quarter of red ink in the last three months of 2013 — but also saw its losses shrink significantly, to $354 million.

{mosads}Losses were driven down large part because of a more than 10 percent jump in package volume and a 14 percent jump in package and shipping revenue, one of the largest bright spots in the agency’s financial ledger.

The Postal Service had lost well over $1 billion during the same span the previous year, in what is generally the agency’s strongest quarter, because of holiday shipping and mailing.

Still, top postal officials cautioned not too read too much into the improvements and stressed the Postal Service desperately needed Congress to pass legislation that would give the agency more flexibility and update its business model to the 21st century. In all, the agency has sustained losses in 19 of the last 21 quarters.

The Postal Service has said it could easily find itself low on cash through this October and warned it could have to implement emergency procedures to ensure the mail gets delivered.

“The Postal Service is doing its part within the bounds of law to right size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business,” Postmaster General Patrick Donahoe said in a statement.

“We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation. We appreciate the efforts of the House and Senate oversight committees to make this happen as soon as possible.” 

In a release, the Postal Service noted that first-class mail volume — the USPS’s most profitable product — continued to drop in the first three months of fiscal 2014, and the agency had to aggressively cut its staff and rely more on buyouts to reduce its red ink. First-class mail volume dropped by almost 5 percent in the first quarter of fiscal 2014.

The Postal Service has made a concerted effort to boost its packaging business in recent months, even partnering with the online shopping giant Amazon to deliver in certain places on Sunday.

Postal officials also continue to urge lawmakers to roll back a required prepayment for future retirees’ healthcare. The agency has already defaulted on more than $16 billion worth of those payments in recent years, and is already warning that it won’t make a $5.7 billion payment scheduled for September.

Still, the improvements in the Postal Service’s financial health could actually make it more difficult for a postal reform bill to make it to President Obama’s desk. The USPS lost $5 billion in 2013, down from a record $15.9 billion the year before.

Both the House Oversight and the Senate Homeland Security committees have cleared postal measures, with the Senate action coming just this week.

But deep divisions among lawmakers and stakeholders remain about how to best set up the USPS long term. Postal unions have noted that the required prepayment have recently accounted for more than 100 percent of the agency’s losses, which they say means USPS is often turning an operating profit.

Because of that, unions and more liberal lawmakers have said that legislation should concentrate on giving the USPS new chances to raise revenues.

But postal service officials said that the view that the agency had an operating profit were too simplistic. Top Republicans on Capitol Hill say that the agency still needs to be “rightsized” to deal with declining mail volume.