Postal Service Ends Fiscal Year 2011 with $5.1 Billion Loss

Growth in Shipping Services; Continued Decline in First-Class Mail Volume

The U.S. Postal Service announced it ended its 2011 fiscal year (Oct. 1, 2010 – Sept. 30, 2011) with a net loss of $5.1 billion. The year-end loss would have been approximately $10.6 billion had it not been for passage of legislation that postponed a congressionally mandated payment of $5.5 billion to pre-fund retiree health benefits.

Total 2011 mail volume declined by 3 billion pieces, or 1.7 percent, from 2010. The Postal Service’s largest and most profitable product, First-Class Mail, continued its year-over-year decline, from $34.2 billion in 2010 to $32.2 billion in 2011 (5.8 percent), which dwarfed continued growth in its more competitive products, packages and Standard Mail.

USPS Shipping Services revenue, which includes Priority Mail and Express Mail, increased $530 million in 2011 (6.3 percent). The increase in Shipping Services revenue was driven by strong growth in the Parcel Select and Parcel Return Services, due to increased mailings of packages, as customers continued to use the Internet more often to purchase products. Revenue from Standard Mail increased by $495 million (2.9 percent) on a volume increase of 2 billion pieces (2.6 percent).

“The Postal Service can become profitable again if Congress passes comprehensive legislation to provide us with a more flexible business model so we can respond better to a changing marketplace,” said Postmaster General and CEO Patrick Donahoe. “To return to profitability we must reduce our annual costs by $20 billion by the end of 2015. We continue to take aggressive cost-cutting actions in areas under our control and urgently need Congress to do its part to get us the rest of the way there.”

Postal Service Losing Credibility with Mailing Industry

The Direct Marketing Association (DMA) expressed disappointment that the U.S. Postal Service (USPS) has told the Postal Regulatory Commission (PRC) that it will pursue its request for exigent (above inflation) postage increases. These increases would be in addition to the now scheduled 2.1 percent increase that becomes effective January 22, 2012. This request is in error. DMA is urging the PRC to reject this plan. The future of the US Mail depends upon forward thinking. This is not the time to drive more mail from the system. The USPS will rely upon data that is over one-year old to support driving postage higher. Rather than digging up the past, USPS should be looking forward and right-sizing its network, transportation, and employee complement.

Source: DMA

Postal Service Cutbacks May Hurt Nonprofits

The U.S. Postal Service could hike mailing costs for nonprofits if a proposed bill by Congressman Darrell Issa (R-CA) passes. The bill would help cut costs and restructure management. Over six years, it would reduce the 40 percent discount nonprofits currently receive to 10 percent. Many nonprofits use the discount to solicit donations through direct mail, which accounted for 78 percent of the $300 billion donated in 2009.

Source: Christianity Today