(PostCom Bulletin)With one month of financial reporting left in the current fiscal year, the Postal Service’s results continue to lag expectations. Consistent with recent trends, the Postal Service reported significant declines in market-dominant product volumes, contributing to troubling financial results for the month of August 2023. Competitive product volumes ticked up slightly, but overall postal volumes were down more than almost eight percent for the month, and eight and a half percent year-to-date.
For the month of August, the Postal Service posted a net operating loss of $908 million. That marks a decline relative to 2022 performance, and greatly exceeds the planned operating loss of $531 million. Year-to-date, the Postal Service’s operating loss stands at $7.1 billion, exceeding the expected loss by seventy-two percent. Comparisons with last year are meaningless because of the passage of the Postal Service Reform Act of 2022 which greatly reduced retiree health care liabilities. Total revenue was below planned levels for the month by 4.7 percent, but greater than the same period last year (SPLY) by 1.5 percent thanks to two rate increases in the last twelve months.
Consistent with recent trends, Market Dominant product volumes declined substantially relative to SPLY. Marketing Mail volume fell by 10.7 percent and First-Class Mail volume was off 4.5 percent compared to the previous year. The Postal Service’s package business fared slightly better; competitive product volumes were flat with revenues increasing by 3.1 percent.
Though volume declined significantly during the month of August, the Postal Service’s labor utilization again continued to exceed demand, as total workhour reductions failed to keep pace with losses in workload. Though total workhours were reduced by three million relative to SPLY, controllable salaries and benefits expenses were reduced by less than one percent due to wage increases and cost of living adjustments.
As volumes continue to decline, the Postal Service struggles to reduce non-personnel expenses which fell by four percent for the month but continued to exceed planned amounts. Transportation costs were more than eleven percent less than in 2022, but those reductions were offset by significant increases in depreciation and amortization costs and vehicle maintenance expenses.
