Despite plans to improve profitability, the U.S. Postal Service has revealed that it lost $6.5 billion in the fiscal year that ended on Sept. 30.
The USPS made the announcement on Tuesday and said there is no way it will break even next year, either, according to Reuters.
U.S. Postmaster General Louis DeJoy said revenue fell 0.4 percent to $78.2 billion. He added that the losses were exacerbated by $2.6 billion in inflation costs “above what we projected and what we were able to recover.”
“We are not happy with this result,” DeJoy said.
The USPS has been losing money for years and has been making efforts to right the ship.
Stamp prices have gone up repeatedly, and the service aims to cut $1 billion in transportation costs next year. A 10-year restructuring plan is also underway that seeks to eliminate $160 billion in projected operating losses.
Implemented in 2021, that plan had initially forecast that the USPS would begin to break even by 2023. Clearly, that milestone was not reached.
DeJoy, a Donald Trump appointee, did note that the belt-tightening has reduced the predicted $160 billion loss to less than $60 billion.
Americans, though, are relying less and less on the postal service.
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First-class mail volume fell 6.1 percent in 2023 to 46 billion pieces, Reuters reported. That is down 53 percent since 2006 and is the lowest volume since 1968.
Still, revenue rose to $515 billion simply due to higher stamp prices.
A large amount of the loss was due to a 2.6 percent increase in compensation and benefits expenses for the service’s 640,000 employees. Those costs came out to $52.8 billion.
In an effort to stem the bleeding, the USPS “did not make the full $5.1 billion in retirement plan payments due,” Reuters reported.
Despite the cuts, operating costs saw an increase of $5.8 billion last year, up 7.3 percent for a total cost of $85.4 billion.
In response, the USPS is requesting yet another hike in stamp prices, from 66 cents to 68 cents. Stamp prices have already gone up 32 percent over the last four years.
In 2022, President Joe Biden also signed legislation providing the service with about $50 billion in “financial relief” over the next decade, Reuters reported.
While first-class mail still accounts for the vast majority of USPS delivery volume, according to The Wall Street Journal, it brings in far less revenue than package delivery.
Thus, USPS has been making a bid for a larger portion of the package-handling business and has improved its on-time delivery to be on par with competitors such as FedEx and UPS.
The Journal reported that in 2022, 95.1 percent of USPS packages were delivered on time, compared to FedEx’s 92.4 percent and UPS’ 96.9 percent.
