Postal Service Reports 3Q Net Loss of $586 Million
The U.S. Postal Service reported a net loss of $586 million for its third quarter of fiscal 2015, a reduction of $1.4 billion from the net loss of $2 billion for same period last year.
Shipping and package revenue and volume increased by 10.6% and 13.4%, respectively, from the same quarter last year.
Operating revenue was $16.5 billion for the quarter, essentially unchanged from the same period last year. Due to the seasonality of its business, the Postal Service has historically experienced lower revenue during the third quarter of each year. A price increase affecting certain mail classes went into effect May 31; however this was offset by declining mail volumes as First Class Mail and Standard Mail volumes fell 2.6% and 2.1%, respectively, compared with the same period last year.
"The continued growth of our shipping and package services is a direct result of the Postal Service's continued efforts to offer consumers more choice, excellent value and reliable service in a growing and competitive marketplace," Postmaster General Megan Brennan said. "We are investing in our network and continually enhancing our services to best compete for America's shipping and package delivery business."
Total controllable operating expenses increased by $256 million from the same quarter last year. This is the result of higher compensation costs primarily attributable to contractually obligated salary escalations, increased benefits expenses and additional work hours associated with growth in the more labor-intensive shipping and package business.
"The combination of growing package revenues and improved productivity gains were not sufficient to offset mail volume declines and inflationary pressure, largely due to contractual increases in operating expenses, including wages, benefits and transportation." Executive Vice President Joseph Corbett said. "This underscores the need for a combination of continued sales growth, productivity gains and legislation to ensure the Postal Service can return to financial health and meet its public service obligations."
