WASHINGTON – The U.S. Postal Service ended the 2013 fiscal year (Oct. 1, 2012 – Sept. 30, 2013) with a net loss of $5 billion. This marks the 7th consecutive year in which the Postal Service incurred a net loss, highlighting the need to continue to capitalize on growth opportunities, reduce costs, and enact comprehensive legislation to provide a long-term solution to the agency’s financial challenges.
Even though the Postal Service has implemented a number of strategies that resulted in $15 billion in annual expense reductions since the Postal Accountability and Enhancement Act was passed in 2006, the combination of onerous mandates in existing law and continued First-Class Mail volume declines threatens the Postal Service’s financial viability.
“We’ve achieved some excellent results for the year in terms of innovations, revenue gains and cost reductions, but without major legislative changes we cannot overcome the limitations of our inflexible business model,” said Patrick Donahoe, Postmaster General and Chief Executive Officer. “Congress is moving forward with legislation that has the potential to give us greater flexibility and put us back on a firm financial footing, and we strongly encourage that they continue moving forward.”
The legislative requirements put forward by the Postal Service, as outlined in the Five-Year Business Plan, include:
- Restructure the Postal Service health care plan.
- Refund Federal Employees Retirement System (FERS) overpayment and lower future FERS payment amounts to those required.
- Adjust delivery frequency to six-day packages/five-day mail.
- Streamline the governance model (eliminate duplicative oversight).
- Provide authority to expand products and services.
- Require defined contribution retirement system for future Postal Service employees.
- Require arbitrators to consider the financial condition of the Postal Service.
- Reform Workers’ Compensation.
Results of Operations
Highlights of yearly results compared to the same period last year include:
- Total mail volume was 158.4 billion pieces compared to 159.8 billion pieces a year ago. Package and Standard Mail volumes grew by 210 million pieces and 1.4 billion pieces, respectively, while the most profitable product, First-Class Mail, fell by 2.8 billion pieces, led by single-piece volume decline.
- Operating revenue, excluding a $1.3 billion non-cash change in an accounting estimate, was $66 billion compared to $65.2 billion in 2012. While this is the first growth in revenue since 2008, declining First-Class Mail revenue continues to negatively impact financial results.
- Operating expenses were $72.1 billion in 2013 compared to $81 billion in 2012. Approximately $8.2 billion of this decrease resulted from higher, legally mandated retiree health care benefit expenses and higher non-cash Workers’ Compensation expense in 2012. Expenses in 2013 include a required $5.6 billion contribution to retiree health care benefits that the Postal Service was unable to make. Continued lack of legislation will likely force the Postal Service to continue to default on these payments. Savings from plant consolidations, restructuring hours at Post Offices, reductions in delivery units, and workforce optimization resulted in approximately $1 billion of savings in 2013.
- The net loss for the year, which was decreased by a $1.3 billion non-cash change in estimate, was $5 billion. However, this change in accounting estimate has no impact on the Postal Service’s receipt of cash, or cash on hand, nor does it lessen the severity of its current liquidity situation. For more information regarding the non-cash adjustment, refer to the Form 10-K, available online.
The Postal Service continues to grow its Package Services business. From fiscal year 2012 to fiscal year 2013, revenue from Package Services increased by $923 million, or 8 percent, on a volume increase of 210 million pieces (6 percent). By developing innovative services to appeal to the growing parcel delivery market, Shipping and Package Services grew to $12.5 billion, representing approximately 19 percent of revenues. Standard Mail revenue grew by $487 million, or 3 percent, on a volume increase of 1.8 percent.
“Our productivity reached an all-time high in 2013, increasing 1.9 percent, compared to 2012,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “This marks our fourth consecutive year of positive total factor productivity growth since the depths of the recession in 2009.”
Work hours in 2013 decreased by 12 million or 1.1 percent, despite an increase of approximately 774,000 delivery points during 2013.
At the end of the 2012 fiscal year, the Postal Service reached its statutory debt ceiling of $15 billion for the first time, and it remains at the limit at the end of the 2013 fiscal year. “Our liquidity continues to be dangerously low and our liabilities exceed our assets by approximately $40 billion,” said Corbett. “This underscores the need for Congress to pass legislation that improves our financial position and that gives the Postal Service a more flexible business model to improve its cash flow. Despite reaching the debt limit, Postal Service mail operations and delivery continue as usual and employees and suppliers continue to be paid on time.”
11 thoughts on “Postal service loses $5 billion in 2013 fiscal year”
@John_-I agree. So, why doesn’t the government go after the fraud in the food stamp program, I.R.S. Disability, Medicare (believe me I can tell you about some in medicare), and all the other wasteful programs. You could start with Farm Aid and work from there. There would be no shortage if they would just clean up their act. One of the bigger ones is going top be Obamacare. We could fund all those programs for a long time just on the fraud savings. Don’t we pay these people to manage this stuff for us? Fire the whole damn bunch and put in people who want to do the job.
There are no food stamps. There are cards and cards do not pay for non food items. It’s all determined in the computer. You can’t cheat anymore LVS because people don’t get stamps anymore to trade or sell.
Anything to tread on the poor is what LVS supports. He wants po folk to be beneath him at any cost, however HIS gubment money is OK! He’s jealous that other people get gubment aid like he does. He wants it for himself and not others so he can feel superior in some way. It’s because he had no self esteem. He wants to blow out your candle to make his shine brighter.
Get the government out of the mail business. Let Fed Ex and UPS compete for it.
Government pentions at ALL levels, are breaking the bank. You have teachers retiring in their mid 50s making 5.000-6.000-7.000 a month retired? That cannot happen.
I had a friend retire from the highway patrol at 58 years old and he says he will get 7.000 a month the rest of his life? 30 years or so? The taxpayer can no longer float this kind of bloat!
I have always thought it would be proper for gov workers to get the average wage for their state. whats everyone think? If they dont want to work for that, then move on and let someone else work.
could someone please explain to me why its cheaper to hire UPS to deliver a package thru the USPS? Yes a deal was made between the two but common sense does not enter into it for me. Guess sometimes you can price yourself right out of business.
UPS has had that arrangement with USPO for years now. As an example UPS picks up the package in Chicago and transports it to Mason City. UPS then delivers the package to the Mason City Post Office and then the post office delivers it to the buyer. It takes at least one day longer to get your package that way. But the cost of shipping the package is cheaper for the seller.
Postal Service going broke, but senior citizens throw a fit when discussion of no Saturday service is discussed.
If Saturday junk mail is that exciting to you, you may need a hobby.
@Fred-From what I have heard it is not senior citizens at all. Most of us do not care about Saturday mail. I have heard it is the businesses and the politicians that block it and mostly in the smaller towns. It is stupid to make the postal service operate at a loss year after year.
Why does congress continue to let this happen? They lose billions at the postal service, billions at the I.R.S. and spend billions in foreign aid but cut food tamps for hungry people here at home. They allow fraud in the disability program and in medicaid to the tune of billions of dollars but want to cut the pay and benefits of the finest military in the world. They pay themselves for life and cover themselves with the best insurance in the country and let the taxpayers go to hell. We need to do something to stop this now.
@LVS, I agree with all your points but there is plenty of fraud in what you call food stamps. They used to be be stamps and had to be used for food but that is no longer the case. It is now a debit card program and it was put on to the retailer to enforce it. It can buy anything, there are no restrictions other than a retailer saying, this is not food, and this beer and those cigs can’t be put on this card. It used to be a disgrace for someone to have to stand in front of the next person on in the line to use food stamps, the debit card took that disgrace out of the picture when they found out they don’t have to live within the food rules.