The U.S. Postal Service reported a net loss that ballooned by $1.8 billion and a 5% decline in parcel volume for the second quarter, as the USPS faces the same ecommerce declines as other major carriers while wrestling with pain from a major network overhaul, union unrest and battles over its up-and-down EV adoption.
On a GAAP basis, the quarterly loss was $2.5 billion, compared to $639 million a year ago. The so-called controllable loss, when backing out unfunded liabilities and workers compensation costs, was $498 million, an improvement over $648 million in 2022.
Operating revenue for the USPS was $19.3 billion in Q2, down 2.4% from $484 million in 2022. Parcel shipping volume was 1.7 billion pieces, down from 1.8 billion pieces a year ago. First-class mail, which also includes some ecommerce activity, declined 8% to 11.9 billion pieces.
While revenue from parcel shipping decreased 2% to $7.6 billion, revenue from first-class mail ticked up a half percent to $6.3 billion, even with the volume drop. This was thanks to twice-yearly price increases approved in 2022 by the Postal Regulatory Commission (PRC).
“The Postal Service is making rapid progress with our 10-year transformation and modernization plan, which has already produced strong service performance and efficiency improvements and is creating a much more capable and effective operational model for the nation,” said Postmaster General and CEO Louis DeJoy in a release. “We continue to focus on achieving break-even financial results for the 10-year period, although inflationary and economic conditions, as well as administrative hurdles, have proven difficult.”
When presenting the 10-year Delivering for America plan in 2021, DeJoy said efficiencies and revenue gains would help fuel a break-even result for the entire period. But a two-year progress report on the plan, issued last month, now calls for a $70 billion deficit during that period. This is an improvement from an earlier projection of a $160 billion loss.
Last month, the postal Office of Inspector General (OIG) ordered a public review of various aspects of the 10-year plan, including its call for consolidation of sorting and delivery operations into regional centers.
According to an op-ed in The Hill, the USPS is on the Government Accountability Office’s (GAO) biannual list of high-risk federal agencies “vulnerable to waste, fraud, abuse and mismanagement or in need of transformation.”
Part of the costs outside of the USPS’ control are investment of its retirement funds, which by law are limited to government bonds. A recent OIG report on the historical performance of retirement funds found this lack of authority to diversify investments has resulted in lower returns and an increase in expenses, the USPS noted.
The OIG estimated a diversification of investments, as state employee plans use, would have netted $1.2 trillion instead of $298 billion listed at the end of fiscal 2022, per The Hill.
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