NEW YORK: The U.S. Postal Service, which has suffered chronic losses year after year, saw costs again outpace income in 2015 as higher benefits expenses and more labor-intensive shipping and package business ate away at adjusted profit.
The agency posted so-called controllable income of $1.2 billion for the year, down from $1.4 billion in 2014. Controllable income excludes a $5.7 billion government-mandated payment for retirement benefits, among other costs.
Meanwhile, controllable operating expenses climbed by $1.3 billion to reach $67.6 billion, reflecting what the agency called “substantial financial pressure that demonstrates the need for legislative reform.”
According to Postmaster General Megan J. Brennan, any business growth and operational efficiencies won’t be enough without “the enactment of legislation that makes our retiree health-benefit system affordable and that provides increased pricing and product flexibility.”
For the 2015 fiscal year, the Postal Service recorded a net loss of $5.1 billion, compared with a loss of $5.5 billion in 2014. The agency reported revenue this year of $68.9 billion, up from $67.8 billion. Operating expenses inched up 0.9% to $73.8 billion.
For the year, the Postal Service had total mail volume of 154.2 billion pieces, down from 155.5 billion last year.
While shipping and package volume climbed 14%, bringing with it added labor costs, first-class mail and standard mail volume fell by 2.2% and 0.3% respectively.
In seeking to keep pace with the digital era, the postal service has been relying increasingly on its package business as e-commerce takes off.
Looking ahead, the postal service expects added pressure on results with the slated rollback of an exigent surcharge that has provided an estimated $3.5 billion in revenue since its inception.
Last month, the agency said it would seek to increase its commercial-package shipping prices by an average of 9.5% and by double digits for its bread-and-butter business of shipping packages weighing less than a pound.
The highest price increases have been requested to start in mid-January for packages that weigh under a pound, including for Parcel Select products, which are used by United Parcel Service, FedEx and Amazon.com Inc. Those companies drop packages off at the local post office, then trucks deliver the packages to residential doorsteps. Average revenue for USPS on these is about $1.74.
