The United States Postal Service (USPS) reported $354 million net losses for its first quarter fiscal 2014 that ended December 31. The performance of the Postal Service improved compared with its $1.3 billion losses recorded in the same quarter a year earlier.
Over the past 21 quarters, this is the 19th period for the Postal Service to record losses. During the quarter, its operating costs declined by $574 million. Its has $63 billion liabilities, which exceeds assets by approximately $40 billion.
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Financial results details
During the quarter, USPS said its total mail volume was 42 billion pieces, down from 43.5 billion pieces. Its First-Class mail volume declined by 4.6% and Standard Mail volume dropped by 2.3%. Its Shipping and Package volume rose 10.3%.
USPS said its operating revenue increased by $334 million or 1.8% to $18 billion while its operating expenses declined 3% from $18.9 billion to $18.3 billion.
According to USPS, its most profitable category is the First-Class Mail, but its revenue from the category declined by $209 million due to a volume decrease of 817 million pieces from the year-ago quarter. The Postal Service explained that the decline was due to the ongoing trends in the mailing practices of consumers and businesses originating from the recent recession, and the continuous migration towards electronic communications and transactional alternatives.
The most significant factors contributing to this decline were the ongoing trends in the mailing behavior of consumers and businesses emanating from the recent recession, and the continuing migration toward electronic communication and transactional alternatives.
On the brighter side, USPS said its revenue from its Shipping and Package category continues to grow. Its revenue for the quarter increased $479 million compared in the same period a year earlier due to the increase in online shopping, Sunday deliveries in limited U.S. markets. It was also driven by the ongoing promotion of the Postal Service regarding the value of its shipping services.
USPS needs comprehensive postal reform legislation
According to the Postal Services, it was able to increase its revenue by taking advantage on opportunities in shipping and package services, and aggressive reductions in operating costs. However, it continues to incur losses because of the persistent decline of higher-margin Firs-Class Mail, stifling legal mandates, and inflexible business and governance models.
USPS Postmaster General and CEO Patrick Donahoe, said, “The Postal Service is doing its part within the bounds of law to right size the organization, and I am very proud of the achievements we have made to reduce costs while significantly growing our package business.”
However, Donahoe pointed out, “We cannot return the organization to long-term financial stability without passage of comprehensive postal reform legislation. We appreciate the efforts of the House and Senate oversight committees to make this happen as soon as possible.”
According to the Postal Services, it will be forced to default another $5.7 billion required prefunding payment for retiree health benefits due on September 30,2014 without legislative change. USPS emphasized that that it does not have enough cash, and it has no ability to borrow funds on the period to fulfill its obligation.