The U.S. Postal Service on Friday released the latest in a series of gloomy financial reports, announcing a loss of $5 billion for the 2013 fiscal year, ending on Sept. 30.
That marks the seventh consecutive year the Postal Service has reported a net loss, despite significant changes the agency has made to trim costs from its operations, including workforce reductions and consolidating delivery routes.
In a conference call with reporters, USPS executives talked up the effects of those efforts – amounting to nearly $1 billion in savings – but reiterated that the agency will remain in precarious shape until Congress passes legislation to relax the requirement that the Postal Service prefund retiree benefits and establish more operating flexibility.
“The key for us is that Congress has to act. That is the lion’s share of what’s left,” Postmaster General Patrick Donahoe said.
On the business side, the Postal Service’s balance sheet was weighed down by continued declines in First Class mail, the agency’s most profitable product. First Class mail volume dropped by 2.8 billion pieces in fiscal 2013.
That tumble overshadowed bright spots in the agency’s business, led by increases in package volume attributable to the continued growth in ecommerce. The Postal Service reported an increase of 210 million pieces in its packages business, with revenue up $923 million, or 8 percent.
Standard mail volume was also up, with revenue up $487 million in the fiscal year, an increase of 3 percent.
The Postal Service said that shipping and package services together account for roughly 19 percent of the agency’s overall revenue, totaling $12.5 billion.
And the Postal Service is looking to make those business lines an even bigger part of its revenue stream. The agency has been seeking permission from Congress to scale down to a five-day delivery schedule for regular mail. Packages are going in the other direction. In February, Donahoe announced that the Postal Service would begin offering delivering packages on Sunday. Then last week, word surfaced that Amazon had inked a deal with the Postal Service for Sunday delivery in select markets.
“The future of packages, that’s seven days a week,” Donahoe said.
But USPS officials stressed that the agency won’t be able to grow its way out of its current financial predicament. In aggregate, the Postal Service says that its liabilities exceed its assets by roughly $40 billion, while the agency is at the cap of its statutory debt limit of $15 billion, creating a situation where “liquidity continues to be dangerously low,” said Joseph Corbett, the agency’s chief financial officer and executive vice president.
“Obviously the financial hole is huge,” Corbett said.