USPS Reports Further Losses in Q3 2016
Losses more than double compared to the same period last year; periodicals continue to decline in volume.
Another quarter, another grim earnings statement from the Postal Service.
The agency posted a net loss of $1.57 billion for the third quarter of its fiscal year (April 1 to June 30), more than double the $586 million loss recorded over the same period in 2015.
Operating revenue saw another slight increase, to $16.64 billion (up 0.7 percent over last year), but the bump wasn't nearly enough to offset a 12.4 percent increase in operating expenses and the termination of the exigency surcharge — a 4.3 percent premium which had applied to all classes of mail before expiring in April. The loss of the surcharge is expected to hurt USPS revenues by nearly $2 billion each year, according to the agency.
As of now, savings afforded to publishers by the removal of the exigency surcharge have not translated to an increase in shipping. While overall volume remained stable, the periodicals class dipped 3.8 percent decline in the number of pieces shipped, to 1.43 billion, mirroring recent quarterly declines.
It's the 41st consecutive quarter in which less periodicals were shipped than in the corresponding period the year before, and overall volume in the periodicals class has fallen 37.8 percent from a quarterly high of 2.3 billion in the third quarter of 2006.
Despite "encouraging numbers," postmaster general Megan J. Brennan cautioned that the agency's fiscal situation remains bleak.
"Net losses continue to mount," Brennan said in a prepared statement. "Our results in the quarter further underscore the need for legislative reform that provides the organization with greater financial stability."
USPS chief finanical officer Joseph Corbett blamed lackluster revenue growth in the face of mounting losses on the termination of the exigency surcharge, which he termed a "mandated price reduction" in a statement. The Postal Service itself estimates that it lost $450 million during the quarter as a result of the surcharge's expiration, still not nearly enough to approach profitability.
Regardless, renewed calls for a financial life preserver, perhaps in the form of a new surcharge or rate hike, will surely draw the attention of the publishing industry. The USPS argues that it needs around $12 billion in relief in order to return to solvency. Given the scope of the agency's losses — $5.1 billion last year, and $5.5 billion the year before — those figures are difficult to dispute.
But representatives for the publishing industry, like the MPA's EVP of government affairs, James Cregan, argue that the Postal Service needs to retain its clients more than it needs legislative assistance.
"They have to understand that it’s a different age," Cregan told Folio: in April, at the time the exigency surcharge was rolled back. "They’re not the only game in town anymore, and they have to improve their customer relations and understand that we — that is, the MPA — are their customers."