The US Postal Service lost $6.5 billion in its just-completed fiscal year, delivering a blow to the service’s hopes of a financial turnaround.
The Postal Service had projected it would break even in the fiscal year that ended September 30, on its way to annual profits this year and going forward. Its results are particularly disappointing because it received a bump in its revenue earlier this year when shippers shifted package volume away from UPS because of the threat of a strike there.
Postmaster General Louis DeJoy blamed the loss on inflation raising costs for its operations. It also sent printing prices surging, which significantly reduced the amount of junk mail marketers sent via the mail.
Still, DeJoy said that the service is making progress on its transformation goals.
“We are just in the early stages of one of the nation’s largest organizational transformations,” he said. “We are already providing more consistent, reliable, and timely delivery to America’s businesses and residences. We are also addressing near-term financial headwinds relative to inflation as we make strong progress in our long-term cost control and revenue generating strategies.”
The service did not detail how much business it picked up in July and August, as some package shippers shifted business away from UPS. The delivery servicereached a deal with the Teamsters without a strike starting, and said it expects to recapture most of the business that was diverted to other carriers by the end of the year.
UPS said impact of the shift of business to competitors reduced its US package volume by an average of 1.5 million packages per day in the July through September period, with most of that in July and August. FedEx reported it got some pick-up in business but it did not quantify how much it gained, nor did the USPS in its report.
The Postal Service reported that revenue from shipping and packages, now the largest segment of its business by revenue, edged up 1% to $31.6 billion, even as the volume fell by 2%. First-Class mail also brought in 2% more revenue, climbing to $24.5 billion, despite a 6% drop in volume. The biggest hit was a $920 million, or 8%, decrease in revenue from marketing mail.
The Postal Service reported net income of $56 billion in the previous fiscal year but that was primarily due to the non-cash gain of nearly $57 billion from 2022 legislation that changd the way it accounted for its retiree health care expenses.
Stripping out that one-time accounting gain and what the service terms other “non-controllable” costs and gains, the “controllable loss” at the Postal Service soared to $2.3 billion in the just completed fiscal year from a controllable loss of $473 million the previous fiscal year.