USPS Sees $2.1 Billion Loss for First Quarter of FY 2024:

The Postal Service reported a $2.1 billion net loss for the first quarter (Q1) of fiscal year (FY) 2024, which is more than double the $1 billion net loss for the same period last year (SPLY). The first quarter results were unveiled at the open session of the February 8 USPS Board of Governors (BOG) meeting. BOG Chairman Roman Martinez opened that meeting by announcing that the Postal Service had just completed another
successful peak season. He also took the opportunity, as he has at past meetings, to criticize what he
called the Civil Service Retirement System’s (CSRS) flawed requirement that assets be invested solely in
Treasury debt securities, a requirement that he said runs contrary to fiduciary best practices. Martinez
highlighted recent work by the Postal Service Office of Inspector General (OIG) that was critical of how
the CSRS funds are invested and suggests that a more balanced investment strategy would have led to
the Postal Service enjoying an $800 billion surplus in these funds at the end of 2022 rather than having a
$119 billion deficit. Last year, retirement costs were 11.7 percent of operating expenses and totaled $10
billion, Martinez noted. The OIG report also discussed why the Postal Service pays a disproportionate
share of CSRS costs, a reform the Postal Service has been seeking in the Delivering for America plan.
Martinez also pointed out the harmful impacts high inflation has had on these obligations. In FY 2022,
inflation averaged 7.9 percent and interest on Treasury securities was just 2.5 percent. Simply put, said
the former investment banker, “the math doesn’t work.” Higher inflation has also increased cost of
living expenses, the BOG Chairman said, emphasizing that the Postal Service has no control over these
factors.
In his remarks, Chief Financial Officer and Executive Vice President Joe Corbett provided the financial
results for Q1 FY 2024, framing the presentation by noting that revenue was up and the organization
achieved a reduction in controllable expenses, despite high inflation. These actions resulted in an
improvement in controllable income of approximately $300 million, he said. The revenue increase was
driven largely by package, Corbett said, adding that the Postal Service is continuing to maximize labor
productivity and optimizing the network and removed nearly 8 million total workhours during the
quarter. Turning to volume and revenue by mail product, Corbett noted the decline in Market Dominant
mail volume by nearly 3 billion pieces. He told the BOG that nearly half of that decline was due to the
cyclical nature of election and political mail in an off-election year. Finally, Corbett looked at expenses
for the quarter and noted a 3.5 percent difference in inflation from Q1 FY 2023 to Q1 FY 2024. He said
this implies an increase of over $700 million in expenses for this quarter but expenses were actually
lower for Q1 FY 24 compared with SPLY. According to Corbett, the reason is the 8 million workhour
reduction, which led to no increase in compensation and benefits and a $500 million reduction in
transportation costs from the restructuring of the network, consolidation of trips and elimination of
unnecessary trips, and consequent reductions in fuel costs.

Postmaster General (PMG) Louis DeJoy highlighted the good news that the Postal Service handled
almost 7 percent more package volume in the network than in the previous peak season, which, he said,
stemmed from improving service reliability and new product offerings. “We see package shippers
becoming more interested, as we begin the implementation of the full features of our ecommerce
marketing initiatives, and the widely accepted offering of Ground Advantage,” said DeJoy, who also
alluded to a new offering, calling on the audience to “please look forward to a Next Day and Same Day offering from the United States Postal Service in the near future that will change the way you look at
delivery – and the way you look at the United States Postal Service.” During his remarks, DeJoy
acknowledged certain challenges that had an impact on service performance. “In addition to peak
season workloads, and the 12-day evacuation of a major gateway processing plant because of a
hazardous materials incident, our organization encountered the unplanned and abrupt shutdown of a
major transportation and transfer hub supplier in eight strategic locations across the nation,” the PMG
told the BOG. “This required us to stand up transfer operations for over 5,000 truckloads of mail and
packages a day across 18 rapidly deployed locations. The implementation was herculean, but less than
precise and negatively impacted service for First-Class Mail volume during the peak season and will
continue to plague us through the next several weeks,” he said.